TNAG-1624-FCO40-2238-Relations-between-Hong-Kong-and-China-1987 — Page 186

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34.

In the first five months of 1987, five

syndicated loans totalling US$638 million were arranged by

local banks for various projects in China. In line with

China's increased emphasis on channelling foreign funds to

projects directly related to physical production, the bulk

of commercial borrowings have switched from

tourism-related projects to industrial and infrastructural

projects. Examples of the major borrowings arranged so far this year include a US$210 million loan for the

Panzhihua Iron and Steel Complex and a US$240 million loan

for an ethylene plant, both of which are located in

Shanghai.

35.

China-related companies are making increasing use of Hong Kong's capital market for raising funds. For

example, Wah Shing Toys Consolidated Limited, in which Yue

Xiu Enterprises Limited (a firm associated with the

Guangzhou city authorities) has a 50% interest, went

public in June 1987. In the same month, Peace Forest

Limited, with a 30% equity held by the China Construction

Engineering (Macau) Co., made a bid for the acquisition of

Wai Wah Enterprises Limited, a listed property development

company.

Investment

36.

(a) Hong Kong's investments in China

Hong Kong featured prominently as a contributor

of direct foreign investment in China in the first half of

1987. Of the 738 projects approved in this period, 611,

or 83%, involved Hong Kong investors. In view of the

saturation of hotels in many parts of China, some Hong

Kong investors have shifted their interest to small or

medium-sized industrial projects which can yield quick

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