CONFIDENTIAL ##
11
21.
There were quite a number of China-interest investments in Hong Kong in the first half of 1985 worthy of note. First, Kiu Kwong Investment Corporation Ltd. remained active as the vehicle company for China-interest investments in the property sector of Hong Kong. Second, in June 1985 China Merchants Steam Navigation Company
bought 25% (valued at HK$90 million) of the total shares
of Far East Bank Ltd. Third, a significant development in
the manufacturing sector was the acquisition of China
Cement Co. (Hong Kong) Ltd. by China-interests through
their holding company named Brummen Co. Ltd in January
1985. China Cement was believed to be in serious
financial difficulties, probably to the extent of being
insolvent, at the time of acquisition. A commitment of
HK$1 billion was involved, of which HK$300 million was
paid in cash to the creditor banks and the remaining
HK$700 million was represented by loans (already
committed) by the BOC Group to China Cement. Some of the
China-interest bank loans are now interest free i.e.
non-performing though not considered bad.
Fourth, in
early 1984 China Resources Purchasing Co. Ltd., a new
subsidiary of China Resources (Holding) Co. Ltd., started
implementing a plan to open in the following three years
(1984 to 1986) a total of 30 supermarkets, each involving
a cost of HK$5 million. By March 1985, it was reported that a total of eight supermarkets of sizes ranging between 300 square metres and over 1,000 square metres had
been established. It was also reported that around 40% of
the goods sold are China-made.
22.
Besides making profits which contribute to the foreign exchange earnings of China, Chinese investment in
Hong Kong appears also to serve other purposes. First,
Hong Kong's market economy is probably among the world's
COMEIDENTIAL #2
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