TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 104

GF 323

CONFIDENTIAL

11

機密

23.

The Shenzhen officials confirmed that most

(probably up to 80 to 90% but no definite estimate of Hong Kong's share was given) of its foreign investment was sourced in Hong Kong (12)

report

(13)

When being asked about the

that 56% of the contractual value of foreign

investment in Shenzhen in 1987 was from the United Arab

Emirates, Mr Zhang said that that involved only one contract in the oil extraction industry and nothing had been realised yet.

Management and trading of foreign exchange

24.

According to Mr Ren of the State Administration of Exchange Control (SAEC), People's Bank of China (Shenzhen SEZ Branch), there existed a foreign exchange. contract responsibility system by which Shenzhen had to contribute a pre-determined amount of foreign exchange to the Provincial Government of Guangdong on an annual basis. Foreign exchange earned by Shenzhen above this quota could be retained for its own development. As this quota had remained unchanged for six years, the annual payment took up only a small proportion of the foreign exchange earned by Shenzhen, thus allowing it to retain large amount of foreign exchange to finance its import and export trade, develop industries and improve

infrastructure. However, we were informed that the Provincial Government would probably revise this quota upwards in 1989.

(12) Including both local and foreign interest companies

in Hong Kong.

(13) P. 406 of the Almanac of China's Foreign Economic

Relations and Trade 1988.

CONFIDENTIAL #