Rahul Mehta Gandhinagar LsCandidate

How China averted repatrtiation crisis
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(1) Having dual currency system - Foreign Exchange Certificates and normal Yuan
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(2) Companies can repatriate dollars LESS than dollars they have generated from exports
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What are FEC? Pls google on "China Foreign Exchange Certificates"
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Basically, China has two types of Yuans - normal yuans and FECs. China has been having this dual currency system since 1981
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When a foreigner enters China, and he gives dollars and in return he gets FEC Yuan. The local chinese get salary etc in normal Yuan. When foreigner buys goods and service from local chinese, the foreigner will pay FECs.
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Now there are many stores which will sell imported goods, but they will sell ONLY for FECs. So only foreigners can buy OR those locals who have served foreigners. But locals cant buy goods with normal Yuans they have. They can buy ONLY after they have given some goods or services to foreigners
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Now companies were told --- you can repatriate profits ONLY
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(a) if you generate exports OR
(b) FECs you obtain
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This way, burden of forex remittance and reptriation is taken off the head of govt and people
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In around year 2006, when China entered WTO, China had to allow locals to buy imported goods using normal Yuan. But till then, China allowed sale of goods ONLY in return of FECs.
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We at Right to recall Party have proposed dual currency for India as well. As such, we have proposed 3 currency systems
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(1) Normal rupees
(2) tax rupees
(3) forex rupee
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I will give details in coming post