G.F. 326
CONFIDENTIAL #
16
past, many joint ventures have not been active in finding overseas buyers. This is particularly the case for those joint ventures producing products that do not meet world
standards or suit market demand.
39.
(ii)
Difficulties in converting Renminbi earnings into foreign exchange for remittance overseas
For those joint ventures having a foreign
exchange surplus, the conversion and remittance of after-tax profits are still complicated.
40.
Under the 1980 Regulations for Foreign Exchange Control, foreign partners in joint ventures can apply to the Bank of China to remit out of China their after-tax
profits and other legal income using the funds in their foreign exchange deposit accounts. If these foreign exchange deposits are inadequate, the Chinese government may supply the necessary foreign exchange provided that the joint venture contract as approved by the relevant Chinese authorities carries a clause allowing the conversion of Renminbi into foreign exchange, or that the enterprise is producing goods suitable as substitutes for imports.
41.
In practice, however, approval is not readily granted. It is rumoured that a number of joint venture partners have gone to the black market to convert their Renminbi earnings into foreign exchange.
(iii)
Weak currency
42.
For the few joint venture partners which are allowed to convert their Renminbi earnings into foreign exchange, they face yet another problem: that of a weak
currency. The continued devaluation of the Renminbi in
recent years means that their profits in terms of foreign
CONFIDENTIAL # 3
No comments yet.
Private notes are available after approval.