TNAG-1623-FCO40-2237-Relations-between-Hong-Kong-and-China-1987 — Page 109

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16.

Increased foreign borrowings, probably coupled

with an increase in gold sales, explain why China has

managed to maintain its foreign exchange reserve position

notwithstanding the continued trade deficits recorded in

1986. During the first quarter of 1987, China's foreign

exchange reserves grew slightly, by 3%, to:

US$10.8 billion at the end of the quarter. of this sum, US$2.48 billion were state reserves and US$8.32 billion

were reserves of the Bank of China.

17.

Under

In respect of foreign investment,

additional rules have been enacted to formalize and

clarify the state's present policy towards foreign

ventures. An example of this is the provisions

promulgated on 20 January on the purchase and export of

domestic products by enterprises involving foreign investment to balance foreign exchange accounts.

these provisions, enterprises experiencing temporary

foreign exchange imbalance can apply to purchase

locally-made commodities, apart from those subject to

state unified control, for export. The volume of

domestic goods so purchased, however, cannot exceed the

amount of foreign exchange required to cover the

deficit. In March this year, a set of provisional

regulations on the required ratio of registered capital

to total investment for Sino-foreign joint ventures was

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