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that in 1987 foreign currencies totalling US$4.2 billion were transacted in these centres. In Shenzhen, there is a plan to allow citizens (including temporary citizens) who have obtained prior approval from the government to sell foreign currencies in the adjustment centres
(8).
(iii) Foreign banks in China
18.
China has taken some small steps to enhance the role of foreign banks. Foreign banks can now establish branches in Guangzhou, as well as in Shanghai and the four
Special Economic Zones. Also, foreign and joint venture banks have recently been allowed to carry out limited
Renminbi business. Their clients are confined to firms
with foreign interests and state/collective enterprises which borrow foreign exchange from the foreign banks and need a local currency component. It is likely that China will continue to be very cautious about opening up its banking sector, for fear that its unsophisticated domestic
banks will be unable to withstand the competition.
19.
(iv) Regional financial developments
In support of the coastal development strategy,
the Bank of China (BOC) has decided to add a new foreign currency loan quota of US$700 million this year to fund outward processing industries in the coastal region.
While the head office of BOC will allocate US$500 million
to local branches, the remaining US$200 million will be made available by the BOC group in Hong Kong.
(8) So far only enterprises are allowed to trade their
foreign currencies in the foreign exchange adjustment centres.
G.F. 326
CONFIDENTIAL # 3