TNAG-1457-FCO40-1981-Relations-between-Hong-Kong-and-China-1986 — Page 112

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financial relations between China and Hong Kong, they also

function as a channel through which China can raise funds

for financing development projects in China, as well as

importing modern management skills and technology.

Following the Fujian Enterprises Co. Ltd., which changed

its status in October 1985, the Guangdong Enterprises Co.

Ltd. became a holding company in January 1986 with its

registered capital increased from HK$5 million to HK$50

million.

Prospects for expanding into the China financial sector

30.

Many foreign banks have been attracted by the

potential opportunities for foreign investment and foreign

financing in China. Although China has traditionally

relied on its accumulated trade surpluses for financing

its purchases from abroad, the country's recent trade

deficit (amounting to US$14.9 billion in 1985 compared with only about US$2 billion in 1984 (3)) and sharply

lower foreign exchange reserves (down from US$16.7 billion

in September 1984 to about US$10.85 billion in June 1985

(3)

According to figures recently released by China's Customs Bureau. But according to China's Ministry of Foreign Economic Relations and Trade, the visible trade deficit amounted to US$7.6 billion in 1985, compared with US$1.1 billion in 1984. The discrepancy is due to different methods of calculation. The Customs figures are based on the flow of goods registered at Customs posts, while the ministry figures are derived from signed contracts.

6. F. 326

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