BUSINESS is about risk and rewards. One cannot have the second without at least a modicum of the other, and it is the good manager's task to reduce the ratio. If this can be done at somebody else's expense, so much the better.
This is an option that has long been available in China, thanks to the foreign exchange guarantees provided by the domestic banks.
It must have been rather comforting for overseas partners to have been able to obtain the backing of a domestic bank which offered a foreign exchange guarantee on the total amount of a loan raised for, say, construction finance.
Now the game has changed and it seems the risk factor of trading into China has just been cranked up, with the ending of this privilege by the State Council and the People's Bank of China.
This information is seeping out into the public domain rather than being announced as a major policy change with accompanying fanfares and speeches. It is therefore much too early to gauge what effect it will have on investment in China.
However, there are already early indications that the move is being taken seriously by the banks - despite the fairly widespread disregard for central edicts which has previously been apparent in large parts of China's financial sector.
