G.F. 326
34
The table indicates that the gross financial
transactions (liabilities and claims) of Hong Kong's
financial institutions with China generally followed an upward trend between end March 1979 and end December 1982. By end December 1982, gross financial
transactions reached a level of US$2,720 million.
This was 140% higher than at end March 1979, when it
was only US$1,133 million.
39.
In 1979, 1980 and 1981, financial
In
institutions in Hong Kong consistantly maintained net
claims on banks and non-banks in China, confirming
Hong Kong's role as a source of credit for China. his budget speech to the National People's Congress
in September 1980, Finance Minister Wang Bing Qian
disclosed that the outstanding debt owed to foreign
financial institutions amounted to US$3.4 billion
(total credits of about US$28 billion were known to
have lined up at that time). In this context, the
net claims maintained by Hong Kong's financial
institutions on China were significant. At about
US$1 billion at the end of September 1980, net claims
of Hong Kong financial institutions on China made up
about 30% of the total foreign debt quoted by Wang.
40.
After reaching a peak of nearly US$1.3
billion at end December 1980, net claims of Hong
Kong's financial institutions on banks and non-banks
in China have fallen sharply since the first quarter
of 1981. The first and the most likely explanation
for this sharp fall in net claims on China was
retrenchment consequent on the decision of China's
leaders in late 1978 to devote three years (1979-81) to the re-adjustment and reform of the national
economy. The impact of this was felt only in 1981.
This is because it took time for such a major
CONFIDENTIAL # 3