TNAG-1621-FCO40-2235-Relations-between-Hong-Kong-and-China-1987 — Page 122

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advanced technology, the period of tax reduction will be

extended for three more years. To tackle the problem of

foreign exchange imbalance, all foreign enterprises are now allowed to exchange foreign currencies with Renminbi

among themselves.

15.

Twelve other regulations aiming at providing

better business conditions for foreign investors are in

the drafting stage. These regulations may include certain

restrictions on imports of those goods that can be manufactured by the existing foreign enterprises in

China. A possible danger with such restrictions would be

inefficient import substitution, and excessive protection being afforded to inefficient foreign enterprises.

16.

Regarding infrastructural development in the special economic zones (SEZs) and the open cities, China plans to build 25 power stations with a total generating capacity of 14,400 MW in the SEZs and the open cities during the period of the Seventh Five-Year Plan. This represents a quarter of the total planned increase in generating capacity in China during that period.

17.

In Shenzhen, the largest of the SEZS, the value

of industrial output rose by 18% in the first nine months of 1986 compared with the same period last year. 40% of

this output was exported to overseas markets. Pledged

foreign investment, which is an indicator of investment intentions, fell in Shenzhen in the first seven months of

1986 over the same period last year. Realized investment,

however, increased by 18.9% in this period, to US$143

million.

Industrial projects accounted for 80% of this

G.F. 326

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