TNAG-0946-FCO40-1165-Local-Intelligence-Committee-assessment-of-the-political-sit-1980 — Page 37

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Page No. 3 of 11 pages

Investment in China

9.

1

A seminar on "China's Economy in the 1980's". held in Hong Kong during this month, was attended by over 200 businessmen from 17 countries. It was organised by the Economic Information and Consultancy Co., a firm with close links with Beijing, which had begun publishing a bilingual weekly periodical "China Economic News" in February. The speakers were an eight-man team of Chinese economists led by Professor Xu Dixin of Beijing University, Vice President of the Chinese Academy of Social Sciences. Topics dealt with included the approach to modernisation, economic prospects for the 1980's, economic structure and problems of re-organisation and Guangdong's Special Economic Zones. The team spoke frankly about the shortcomings of China's economy but did not provide those present with any new information on joint venture arrangements.

10.

Leading United Front officials, departing from their normal

line, are also becoming heavily involved in persuading persons of substance known to be sympathetic to invest in China, mainly in construction projects. Emphasis is placed on supporting the "Four Modernisations".

11.

Sir Y.K. Pao announced that his World Wide Shipping Group, backed by the Hong Kong and Shanghai Bank and the Industrial Bank of Japan, had reached an agreement with the China Shipbuilding Industry Corporation and the China National Ship Chartering Corporation. The agreement provides for the establishment of a joint venture company, the International Shipping and Investment Co., with a paid up capital of US$50 m., to build, buy, sell, charter, and manage ships for the international market. While the regulations promulgated by the Chinese last June specified that the chairman of a joint venture company must be provided by the Chinese side, and while it so far appears to have been the practice for the Chinese share of the total investment to be not less than 50%, in this case Sir Y.K. Pao is to be the chairman and the Hong Kong partners' share is 55%. A further departure from the normal arrangements is that the new company is to be incorporated not in China but in either Hong Kong or Bermuda or both. These special arrangements indicate that the problems arising from the joint venture regulations can be resolved pragmatically when necessary.

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/ para 12.