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April 13, 2007
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Duty bound
As China makes its way from basket-case to some kind of neo-capitalist free-for-all, there's always going to be speed bumps. Typically the Chinese are sticklers for rules - lateral thinking and the ability to see the forest for the trees is not usually a strong point. For example, Reuters reports on a ridiculous situation in the commodities futures market: The Shanghai Futures Exchange has refused to accept Chilean copper as good delivery because the metal no longer carries a duty-paid certificate, merchants said on Friday.China abolishes duty on Chilean copper as part of a free trade agreement, so now that copper is not good for delivery on futures contracts. The obvious solution (waive the requirement for a duty certificate on Chilean copper) is impossible because that would require circumventing existing regulations. Which goes to prove the rule that regulation will always be slower than markets. This will continue to be a big issue for China as it's economy evolves. posted by Simon on 04.13.07 at 09:49 AM in the China economy category.
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