TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 126

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abroad at non-concessionary rates of interest, or both.

China's international credit-rating is good and the IMF

has produced a scenario in which a rise in China's long

and medium-term external debt to $44.6 billion in 1990

(from $9.3 billion in 1985) would produce a debt service

ratio of only 7.4% in that year. But the Chinese leaders

are averse to the idea of borrowing on a large scale from

abroad. They would much dislike having to choose between

doing this and putting a brake on the country's rate of

development. But choose they may have to; and before

very long.

(iv) Foreign Investment

24. The drive to attract capital, technology and skills

from the developed countries has not been an unqualified

success. In mid-1985, the Chinese authorities told the

IMF Article IV Consultation team that not many of the

projects established with foreign investment had employed

advance technology; that exports from the four Special

Economic Zones in South China had been lower than expected;

and that various unauthorised trade and foreign exchange

practices had developed in these zones. I hear all the time

in Peking about difficulties experienced by foreign investors.

Some concern the very high wages payable by Joint Ventures

to locally-engaged labour, some the heavy taxes levied on

Joint Ventures and many the absence of freedom to convert

dividends earned in local currency into foreign exchange.

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