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CONFIDENTIAL
14
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27.
When being asked whether a foreign investor
coming to China could make use of the adjustment centre to
convert its foreign currency into Renminbi for buying land
at the auctions, the representative of the foreign
exchange adjustment centre said that unless the foreign investor had set up a legal entity (corporation) in
Shenzhen and obtained approval from SAEC, he could not
engage in foreign exchange trading in the centre.
Activities of foreign banks
28.
Mr Ren explained that activities of foreign
banks in Shenzhen were highly restricted. They could only engage in wholesale banking activities involving
transactions denominated in foreign currencies. Since
they were supposed to have brought in foreign exchange.
from outside to do business in China, they were not allowed to take local Renminbi deposits. While they were
allowed to finance export trade of both foreign or Chinese
enterprises, the financing of import trade encountered
their clients had to be firms with
more restrictions
-
foreign interests or Chinese enterprises which had borrowed foreign exchange from them. All these restrictions aimed at taking advantage of the foreign investment brought by foreign banks, but avoiding the possibility of their competing with local Chinese banks in
core banking business.
Review and prospects
29.
Behind the scene of rapid growth and development, there has been much debate among the Chinese leaders concerning the value and contribution of the SSEZ to China. In the early 1980s when the SSEZ was set up, it was thought that the SSEZ could serve as a model for economic development in China. But by around 1985 when the performance of the SSEZ was under strong criticism,
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