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abroad at non-concessionary rates of interest, or both.
China's international credit-rating is good and the IMF
has produced a scenario in which a rise in China's long
and medium-term external debt to $44.6 billion in 1990
(from $9.3 billion in 1985) would produce a debt service
ratio of only 7.4% in that year. But the Chinese leaders
are averse to the idea of borrowing on a large scale from
abroad. They would much dislike having to choose between
doing this and putting a brake on the country's rate of
development. But choose they may have to; and before
very long.
(iv) Foreign Investment
24. The drive to attract capital, technology and skills
from the developed countries has not been an unqualified
success. In mid-1985, the Chinese authorities told the
IMF Article IV Consultation team that not many of the
projects established with foreign investment had employed
advance technology; that exports from the four Special
Economic Zones in South China had been lower than expected;
and that various unauthorised trade and foreign exchange
practices had developed in these zones. I hear all the time
in Peking about difficulties experienced by foreign investors.
Some concern the very high wages payable by Joint Ventures
to locally-engaged labour, some the heavy taxes levied on
Joint Ventures and many the absence of freedom to convert
dividends earned in local currency into foreign exchange.
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