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17.
During the first half of 1987, China absorbed
US$2.2 billion of foreign loans, of which US$2 billion was
utilized. At the end of June, the state's outstanding
debt stood at US$8.3 billion. If borrowings by
enterprises and provincial authorities are included, China's total foreign debt would amount to over US$20
billion. On present calculations, this foreign debt is
still small relative to the size of the Chinese economy,
and its debt servicing ratio (i.e. annual repayments of
principal and interest as a proportion of annual export
earnings) apparently stays at a safe level of 15% to 20%.
However, as pointed out by the International Monetary
Fund, short-term loans figure prominently in China's debt
structure and this might create some liquidity problems
for China over the next few years. In order to provide a
better system for monitoring the external debt situation,
in August, the State Administration of Exchange Control
promulgated a set of provisional regulations for the
reporting and supervision of external debts. Under these
regulations, enterprises and financial institutions in
China are required to make prompt reports on their foreign
debt positions. Recently, the Chinese government has also
indicated that more attention will be given to spreading
the maturity of loans, and to the management of exchange
rate and interest rate risks.
18.
Concerning the development of the Shenzhen
Special Economic Zone (SSEZ), both its industrial output
and exports showed impressive growth in the first half of
1987, partly reflecting the increased use by Hong Kong businessmen of the outward processing capacity in Shenzhen. Comparing the first half of 1987 with the same
period in 1986, industrial output increased by 67.7% in
real terms, while exports rose by 75% in money terms.
Goods for export now account for about 48% of the total
industrial production in the SSEZ. Moreover, foreign
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