CHINA, faced with the pressing need to devalue its currency because of a plunge in swap market rates, could find itself in renewed trade conflict with the United States if it does so, analysts warn.
''If China wants to get off to a good start with the Clinton administration, it should not fulfil expectations by devaluing the renminbi,'' said Mr Jeff Lewis, regional economist at Smith New Court (Asia) brokerage.
Rumours of devaluation have been filtering out of China because its swap centre prices have dropped eight per cent since December.
This week the National Foreign Exchange Swap Market in Beijing was trading 8.5 yuan to the dollar, a 32 per cent premium over China's official rate.
Most analysts believe companies doing business in China today have contingency plans if the currency suddenly should sink through the floor.
Those companies which are exporting from China stand to gain from the drop since their proceeds are in hard currency. But those selling to the domestic market will lose a large slice of their profits when they convert them.