Two milestones reached in January are testament to the pace of economic change in China.
First, China’s domestic stock markets cruised through the $1 trillion mark in market capitalization. That says a lot about the recent strong run in domestic exchanges: both rose significantly in 2006 and have begun 2007 very strongly. China’s stock markets are already the third largest in Asia behind Tokyo and Hong Kong.
Secondly, the Chinese renminbi finally went through parity with the Hong Kong dollar. Long trailed as an inevitable product of China’s economic growth, the event is nonetheless psychologically important. True enough, the slide of the Hong Kong currency, tied as it is to the fortunes of the US dollar, hastened the inevitable day of reckoning but the event is no less significant for that. Few economists expect anything but the two currencies to increase the daylight between them in the year ahead.