CONFIDENTIAL #B
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first half of this year, at US$1.1 billion, was 23.4% less than in the same period last year. This implies that any stimulation from the twenty-two provisions aimed at improving investment climate in China still remains to be seen. In respect of realized foreign investment, reflecting the commencement or intensification of projects contracted in 1985 and 1986, the amount utilised rose by 5.2% in the first half of 1987 over a year ago, to US$0.73 billion. From 1979 until now, direct pledged foreign investment totalled US$17.1 billion. Of this, US$5.1 billion has been realized. In the past year, there was a trend indicating that more foreign investment was being channelled to projects for increasing physical production.
16.
Apart from the People's Bank of China, the Investment Bank of China has started to provide loans to Chinese enterprises to enable them to participate in joint ventures involving more advanced technology and a higher degree of export orientation. On the other hand, following trouble with a number of loans associated with
foreign investors (9), there are reports that China
intends to step up the control and management of loans granted to foreign business partners, with a view to ensuring repayment. In a related development, China promulgated a set of regulations in February this year concerning the provision by Chinese organisations of guarantees on foreign loans made to joint ventures and foreign enterprises in China.
(9) Notable examples include an outstanding loan of
HK$47.88 million for the construction of the Zhanjiang Haibin Hotel, and a US$63.9 million loan for the construction of a deep water port and a commercial-residential complex in Zhuhai. In many of these cases, the foreign investors had to be bailed out by the guarantors (usually some Chinese banks) or by the Chinese partners.
CONFIDENTIAL #
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