CONFIDENTIAL
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機密
20.
To discourage massive cash withdrawals from
banks, starting from 9 October, PBOC introduced a scheme
whereby the interest rate offered on time deposits of over
three years is linked to the inflation rate. However,
without an increase in the lending rate of equal magnitude (see paragraph 17), this effective increase in the deposit
rate will eat into the profits of the banks.
21.
The effectiveness of the Chinese monetary authorities in restraining the growth of money supply is
not at all certain. It was reported that the Agricultural
Bank of China (ABOC) was issuing fixed amount transferable cheques in lieu of cash for the purchasing of autumn grain from farmers. The circulation of this type of quasi money would tend to nullify the efforts of the central
government to restrain the growth of the money supply. some localities, the ABOC has sweetened the offer by providing consumer durables for sale only to holders of these cheques. But still many farmers preferred cash
instead.
In
22.
(iii) Further liberalization of foreign
exchange transactions
Foreign exchange transactions in China have been
further liberalized. The authorities' controls over the setting of exchange rates in all adjustment centres have been reduced and the trading rates for foreign currencies are now largely determined by market forces i.e. the supply of and the demand for foreign currencies. Following the example of Shenzhen, Xiamen also allows approved individual residents to participate in the
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