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22.
Thirdly, in an attempt to tackle the shortage of
foreign exchange experienced by many enterprises in China,
the SAEC has in the past two years established foreign
exchange trading/coordination centres in a number of major
cities including Shanghai and Guangzhou, and in Shenzhen.
Initially, only Chinese enterprises could participate in
transactions at these centres, but the service has now
been extended to foreign enterprises and joint ventures.
With the exception of the Shenzhen centre since December
1986, the exchange rates in all these centres are fixed by
the Chinese authorities, albeit at a level usually higher than the official rate quoted by the BOC. Partly because
of the more liberal trading conditions, the total amount
of foreign exchange traded at the Shenzhen centre during the period December 1986 to May 1987 was reported to be 6.5 times of that traded in the preceding six months. the other centres, which come under more stringent
regulations, the total amount of foreign exchange traded
has been rather small. The requirement to divulge
information about the sources and the uses of the foreign
exchange traded at these centres has discouraged many
traders. Moreover, attempts to rig the foreign exchange
market in this fashion are likely to have the effect of
encouraging further illegal or quasi-legal transactions.
In
23.
It seems likely that the Chinese authorities
will continue to pursue piece-meal relaxations of foreign
exchange control in some areas. To the extent that these partial relaxations can provide ways to overcome some of the rigidities and inefficiencies inherent in the present system, they should have a favourable effect on the growth of external trade and foreign investment in China, and hence on the development of the Chinese economy.
G.F. 326
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