GF 323
CONFIDENTIAL # 機密
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13.
1988, China's coastal provinces approved 3,684 foreign-funded projects involving pledged foreign investment of US$3.33 billion, 222% and 63.3% more than the respective levels in the same period of 1987. Guangdong and Fujian accounted for 62.5% of these projects (or 2,303)
and 52.6% of the pledged foreign investment (or US$1.75
billion).
15.
(d) Financial developments in China
(i) Loans and money supply
•
In an attempt to combat the high rate of
inflation, the Chinese authorities tightened their control
over loans and currency issue in the fourth quarter of
1988. As a result of the credit squeeze, a number of
industrial enterprises which were heavily dependent on bank
borrowing for their working capital were reported to have
(13) had liquidity problems
Many enterprises reportedly
turned to trust companies and civilian credit associations for finance (14), although these institutions charged much
higher interest rates. While they can be seen as the
fore-runners of self-financing financial institutions
operating on commercial basis, at present their operations
add an element of instability to China's financial system
because of inadequate prudential supervision and central
(13) In some localities, branches of Agricultural Bank of
China (ABOC) were reported to have issued IOU notes instead of cash for the state purchase of agricultural crops. In late November 1988, probably because of the urgent need for agricultural
purchases, the PBOC was reported to have increased its lending to the ABOC.
(14) According to one estimate, there were more than 700
trust, finance and leasing companies and around 1,800 urban credit associations at the end of August 1988.
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