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the first time.
Adjustments in the official rate were more
frequent since then(9)
36.
reduce
In January 1991, export subsidies were abolished
in line with reforms on the foreign trade system.
State-owned enterprises are encouraged to
their
and subsidies
to face more realistic
However, loss-making enterprises could still enjoy much support through direct fiscal subsidies or
concessionary loans.
state on
reliance
exchange rates.
37.
In early 1991, the foreign exchange retention
ratios for export enterprises were standardised and
raised.
For foreign exchange earnings from exports of general commodities, the export enterprise is required, under the current system, to submit 20%, 10% and 10% respectively of the earnings at the official exchange rate to the central government, the local government and the
enterprise production
the However,
central
government has the right to purchase at the swap market rate an additional 20% of the foreign exchange earnings
from the export enterprise as well as all the foreign exchange earnings which the production enterprise obtains the export enterprise. Thus, in broad terms, foreign
from
concerned.
(9)
Devaluations of the official Renminbi prior to April 1991:
exchange rate of the
Timing
Extent of devaluation
1985
1986
Dec 1989
Nov 1990
(%)
15
17
21
9.6
Adjustments in the official exchange rate thereafter have been much smaller but much more frequent, and without public announcement. On 8 September 1993, the official rate stood at Rmb 5.7868 to US$1.
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