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banks and enterprises in those Chinese cities practising the new banking policies. It was reported that during the
first six months of 1986, loans raised in the short-term
money markets in the five cities named amounted to Rmb
13.74 billion, equivalent to more than nine times the
emergency loans extended by the central government to
banks in these five cities during the same period.
recently, a larger regional inter-bank money market
covering 27 cities in the Yangtze River region, including
Shanghai, Nanjing, Wuhan and Chongqing, was set up. It was reported that in less than three months, banks in Shanghai had exchanged Rmb 1.27 billion with each other.
15.
More
In response to the shortage of foreign exchange experienced by many enterprises in China, the State
Administration of Exchange Control (SAEC) under the PBOC has established foreign exchange trading centres in
Shanghai, Guangzhou and Shenzhen. Under the rules governing the Shanghai and Guangzhou centres, foreign enterprises and joint ventures are allowed to trade foreign and local currencies with each other, and not just
with Chinese enterprises. The exchange rates are, however, fixed by the Chinese authorities, and
participants' sources of foreign exchange income are to be carefully scrutinized. The centre in Shenzhen is subject
to less restrictions.
Comments on the current state of China's banking sector
16.
A brief comparison of China's banking system
with those in the western countries shows that there are
major differences between the two. First, the PBOC is
less than a full central bank in the western sense of the
term. There are no open market operations to influence
the level of interest rates, and the PBOC does not seek to
regulate money supply by operating on bank reserves or the
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