G.F. 326
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with the black market rate of Rmb 71/HK$100 at the end of 1987 and nearly 50% compared with the official rate of Rmb 47.7/HK$100. At about the same time, the rate traded at the foreign exchange adjustment centres was in the region of Rmb 6-7/US$ (Rmb 77-Rmb 90/HK$100); this was between the black market and official rates but nearer to
If the the black market rate than the official rate. present trend continues, the value of Hong Kong dollar will soon be at par with the Renminbi in the black market.
32.
It
The depreciation of the black market exchange rate of Renminbi may create pressure for an official devaluation of the currency. This was apparently another issue being hotly debated in Beidaihe in July/August. is rumoured that some Chinese leaders, including Zhao Ziyang, were in favour of a devaluation of the official exchange rate of Renminbi by as much as 20 to 50% in order to narrow the gap between the official and the black market exchange rate
(c)
(20)
Resource allocation between the domestic
and the external sectors
33.
As mentioned earlier, after years of rapid
(21) growth in external trade
the size of China's
(20) Assuming other things being equal, that a devaluation
of the official exchange rate of Renminbi increases the demand for it, thus reducing the differential between the official and the black market exchange
rate.
(21) During the four years between 1983 and 1987, the US
dollar value of China's exports, imports and total trade increased per annum by 15.5%, 19.2% and 17.4% respectively. In the first half of 1988, the US dollar value of China's exports, imports and total trade increased further by 26%, 19% and 22.4%
respectively.
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