-85-
but the indications are that the authoritics will not go far enough for this. On 29th August the rates fixed by
the Committee ware 58,500 for U.S. dollars and 117,000 for sterling, whorcas ratus of 49,000 and 135,000 respectively
Word quoted in the black market.
The now measures will certainly however be effective at once in stimulating China's export trade and earning for her much-nccded foreign exchange. They are not of
course adequate or even designed to remedy the fundamental malaise of the currency situation, and it is to be expected that the process of depreciation will continue.
Financial negotiations with Hɔng Kong.
Hong Kong by reason of its proximity to China is obviously closely lined with what goes on there. Negotiations were accordingly initiated between the Chinese and the Hong Kong Governments, for a Customs agreement, designed to reduce smugling between China and Hong Kong, and for a financial agreement, designed tɔ enlist the co-operation of Hong Kong in maintaining exchange control for China and to give the Chinese what they regard as their duo share of Hong Kong's U.S. dollar earnings from Chinese exports and remittances from Chinese
overseas.
The Hong Kong authorities are sympathetic to tho Chinese demands, in so far as they can be squared with the legitimate interests of Hong Kong itself. Negotiati ɔns on both agreements however have boon retarded by internal technical Gifficulties.
In regard to the Customs agreement, it is hoped to produce a final draft text shortly, but provisional agreement reached in August in regard to the financial
agreement has had to be roviowod owing to the recent Chinese measures referred to above.
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