1
Licensing control now have to observe the licensing procedures. Latest information from China suggests that export licences are now needed for 151 items, including rice, cotton, tungsten, oil, coal, flour, silk, angora and
jute. At the same time, despite stringent measures to control imports being continued into the third quarter, import growth was still rapid, suggesting that the administrative time-lag has delayed the effects of these
measures. As the threat of Lising protectionism and the sluggish damand for primary commodities in the World market are likely to persist and as world trade is not expected to grow very rapidly in the short term, China's export prospects are not very bright. This suggests that
China will have limited scope for reducing its visible
trade deficit through increasing its exports; and
adjustments will mostly have to be made through
controlling its imports.
9.
The huge visible trade deficit has caused a
sharp deterioration in China's foreign exchange reserve
position. Presumably in view of this, and the need to
finance the transfer of advanced technology into China,
China has increased its borrowing overseas. Bonds were issued in West Germany, Japan and Hong Kong by the Bank of
China and China's International Trust and Investment
Corporation. At the end of June 1985, China's foreign
debt (composed mainly of concessionary loans and commercial borrowing) stood at US$4.25 billion.
10.
Dwindling foreign currency reserves have affected the development of the Special Economic Zones. Following a heated debate over the value of the Shenzhen
Special Economic Zone (SSEZ) to China, Chinese leaders have re-emphasized the foreign currency earning role of
CONFIDENTIAL #B
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