TNAG-1624-FCO40-2238-Relations-between-Hong-Kong-and-China-1987 — Page 199

G.F. 326

CONFIDENTIAL E

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6.

(vi)

to regulate the foreign exchange business

of banks and other financial institutions

and the foreign exchange earnings of

trading and non-trading enterprises; and

(vii) to detect and penalise breaches of the

foreign exchange regulations.

The Bank of China (BOC) has traditionally

enjoyed complete monopoly over China's foreign exchange

dealings and international banking business. It was not

until 1979 that BOC's monopoly was gradually and partially

broken. Since July 1979, BOC has been rivalled by the

China International Trust and Investment Corporation

(CITIC) which is a state-owned enterprise operating under

the direct leadership of the State Council. CITIC is

authorised to absorb foreign capital, bring in advanced technology and import up-to-date equipment to speed up

China's modernisation. Another rival to the BOC was set

up in 1986 the re-vitalised Communications Bank of China

(CBOC). It has been given permission to deal in foreign

currencies, engage in support services for foreign trade,

and handle both long-term and short-term foreign loans.

7.

All state organisations, state enterprises and

collectives have to report to SAEC on their planned

foreign exchange earnings and expenditures in the following year. These plans are then assembled by the State Planning Commission for overall approval by the

State Council. The approved plans relating to foreign

exchange flows are administered by SAEC and BOC.

8.

All foreign exchange earned by state

organisations, state enterprises and collectives has to be

sold to BOC. Unless prior approval has been obtained or

CONFIDENTIAL 機 密.

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