Compared to China, Viet Nam, in financial distress, seems less capable of handling the turmoil. Its trade deficit of the first five months this year added up to $14.4 billion, $2 billion more than the whole of 2007. By March 2007, the country had registered measly foreign exchange reserves of $18.5 billion.

But the panic may spill out to surrounding Southeast Asian countries, which are also ailed by inflationary challenges and shaky economic fundamentals, said the report.

The report also cautioned that China should further maintain a vigilant eye on torrent inflows of speculative hot money, which add to uncertainties hanging over the country's financial stability.

Currency Crosses Straits

Taiwan finally gets a chance to carve a slice of the big Chinese tourism pie.

The mainland's Association for Relations Across the Taiwan Straits and the Taiwan-based Straits Exchange Foundation signed an agreement on June 13 that opens the island's door to mainland tourists.

The pact, taking effect on June 20, set a quota for the number of tourists in line with Taiwan's accommodation capacity. A maximum of 3,000 mainland tourists can travel to Taiwan every day, the agreement said.

Mainland residents in Beijing, Tianjin, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangdong, Chongqing, Yunnan and Shaanxi could apply for tours to the island.

Analysts say this move would pump into the island economy, which has in recent years been struggling on the edge of recession.

Taiwan would rake in around 19 billion yuan ($2.7 billion) of revenue for receiving around 1.1 million tourists annually, according to island officials. Besides this, the opening up would create over 40,000 jobs on the island every year.

Natural and cultural landscapes of Taiwan have a considerable appeal to mainland tourists, such as the Ali Shan Mountain, the Jihyueh Tan Lake and the Taipei Palace Museum.

According to Taiwan's industry insiders, mainland tourists are even stronger in consumption abilities than those from Japan or South Korea.

It is predicted that the island's annual growth rate of gross domestic product could add 0.15 to 0.2 percentage points afterwards.

Numbers of the Week

16.2 billion yuan

Online Chinese shoppers spent 16.2 billion yuan ($2.3 billion) in 19 major cities in the first half of 2008, China Internet Network Information Center (CNNIC) announced on June 16.

6.8919

The Chinese currency, the yuan, was trading at 6.8919 to $1 on June 17, hitting a record high since the yuan was unpegged from the U.S. dollar in 2005. By June 17, the yuan had appreciated 17.67 percent since then.