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Mr Ren mentioned that as a general rule, local authorities had to obtain the approval of the Provincial Government before they could spend the foreign exchange retained. For Shenzhen, this procedure took only about 10 days but for some other municipalities, it could take as
(14). long as 3 months
Concerning the foreign exchange retention ratio for individual enterprises operating in the SSEZ, Mr Yang remarked that the proportion of foreign exchange earnings that could be retained by local enterprises (mostly state-owned and collectives) depended on their nature of business. For industrial undertakings,
(15) it was as high as 95%
Such a high foreign exchange
•
(14) When EAD officials visited Beijing in October 1987,
they were informed by the Deputy Director of the SAEC in the central that all foreign exchange earned by enterprises had to be sold to the Bank of China for Renminbi. In return enterprises were allowed to retain on record in their accounts a proportion of their total foreign exchange earnings. The amount retained had to be registered with the SAEC in form of foreign exchange quota against which the enterprises could use Renminbi to buy foreign exchange from the Bank of China. The enterprises were free to use the foreign exchange retained by them. It seems that the same technical procedures should also apply to foreign exchange retained by local authorities.
(15) Foreign interest enterprises operating in the SSEZ
were allowed to retain all of their foreign exchange earnings. When the mayor of Shenzhen, Li Hao, met a group of Japanese reporters on 23.11.88, he mentioned that starting from next year, the foreign exchange retention ratio for foreign interest enterprises would be lowered to 80% (the other 20% had to be handed over to the central government). But it was generally expected that industrial enterprises with foreign interests would not be affected by this new provision. According to the information given by the Shenzhen delegation mentioned in footnote (4), starting from next year the foreign exchange retention ratio for state-owned and collective industrial enterprises would be reduced to 75% from 95%. Of the 25% of foreign exchange earnings being submitted, 20% would be given to the central and 5% to the local government.
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