TNAG-1623-FCO40-2237-Relations-between-Hong-Kong-and-China-1987 — Page 123

G.F. 326

CONFIDENTIAL # 3

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33.

China's budget for 1987 reveals that external

borrowing by the state will be increased to

Rmb 14.6 billion (US$3.9 billion) in 1987, from Rmb 7.67 billion (US$2.2 billion) in the previous year. Given this development, Chinese fund-raising activities in Hong Kong may well increase. It is also noteworthy that the Chinese government has recently empowered Guangdong and Fujian provinces, Shanghai and Tianjin Municipalities, Dalian city, the Bank of China, the China International Trust and Investment Corporation (CITIC), the Communications Bank of China as well as the China

Investment Bank to borrow directly from overseas

erseas (10) Previously, only the Bank of China and CITIC could raise funds directly from abroad.

34.

Regarding the activities of the Bank of China group (BOC group) in Hong Kong, the latest statistics show that total deposits of the group as a whole. (including Ka Wah Bank, Union Bank, and the deposit-taking companies within the group) jumped by 51% last year, to HK$101.8 billion (US$13.05 billion) at the end of 1986. As a proportion of total deposits taken by all authorized deposit-taking institutions in Hong Kong, the BOC group's share increased to 18% at the end of 1986, from 15% a year earlier. In another development, the Guangdong Enterprise (Holdings) has recently acquired a listed company, Union Globe Development, to facilitate fund raising activities in Hong Kong's capital market.

(10)

The central government still exercises control over these borrowing activities. A ceiling is set to the amount of foreign funds that can be raised and the central government has to be consulted before a fund raising project is launched.

CONFIDENTIAL # 機密