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exports are unlikely to be sustained in the coming
months. Moreover, China's textiles and clothing
industries are also faced with unreliable supplies of raw
materials. Instead of supplying the textile yarn and
fabrics to factories within China, many suppliers of these
raw materials prefer to export them direct to overseas
markets to earn foreign exchange. This is particularly
the case in the southern provinces where parallel trading
is relatively more widespread. Shortages of raw
materials, particularly those of a high quality, likely to constrain the upgrading of China's textiles and
clothing output. In an attempt to redress the situation,
the Ministry of Foreign Economic Relations and Trade
extended the export licensing system to cotton yarn and
fabrics in August.
12.
are
Crude oil is another major source of export
earnings in China. The Chinese authorities have recently
announced that China's oil exports would be maintained at
their 1986 level, allegedly in support of OPEC's move to
uphold oil prices in the international market. Probably
of more relevance is the fact that the acute shortage of
energy in the domestic economy has constrained China's
ability to increase its oil exports.
13.
On the imports side, despite the improvement in
the visible trade account, there are no signs that China
will relax its import controls. On the contrary,
effective from 1 June, the import controls list was
extended to cover over 80 types of imports, compared with
only 50 types in 1986. With a view to improving the
business opportunities of Sino-foreign joint ventures and
wholly foreign owned enterprises in China, the Chinese government appeared to have stepped up
import-substitution. As an illustration, the Guangdong
authorities have recently announced that, in principle,
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