TNAG-0946-FCO40-1165-Local-Intelligence-Committee-assessment-of-the-political-sit-1980 — Page 5

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Banking and Commerce

3.

Page No. 2 of 12 pages

Policy towards Taiwan

The Bank of China in Beijing is now doing business with Taiwanese firms by means of Letters of Credit transmitted

through its Hong Kong branch and of remittances through the

Hong Kong branch of the Bangkok Bank and the Commercial Bank

of Hong Kong. Another communist controlled bank in Hong Kong, the Chiyu Banking Corporation, has started to use a U.S. bank, the Chemical Bank, as an intermediary for business with Taiwanese firms. For the past year, Chiyu has been using a local Hong Kong bank for this purpose.

4.

China Resources Co. has recently authorised the

several China Products stores in Hong Kong to sell Taiwanese products which are not in competition with those from China. A Panamian registered vessel of the communist controlled Yik Fung Company recently called in Taiwan to collect Taiwanese goods for shipment to Tianjin.

Banking and Commerce

5.

General

The Bank of China in Beijing is drafting regulations for the grant of loans for joint ventures and has sought advice from its branches or representatives in Hong Kong and other major financial centres of the world.

6.

Remittances to China through the Chiyu Bank have fallen sharply during the past year. The reasons are said to be the greater ease with which foreign currency can be exchanged in China if taken in or sent there, the growth in the practice of making gifts in kind rather than in monetary form and the low interest rate on RMB which makes it more attractive to keep savings in Hong Kong dollars.

/ para 7.

G.F. 316

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