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077030
MDLIAN 9055
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FM PEKING
TO PRIORITY FCO
TELNO 101
OF 220857Z JANUARY 93
INFO ROUTINE HONG KONG, UKREP JLG HONG KONG, ACTOR
CHINA: FOREIGN EXCHANGE RESERVES
SUMMARY
1.
CHINA REVISES FOREIGN EXCHANGE RESERVES ACCOUNTING PRACTICE.
DETAIL
2.
AT A PRESS CONFERENCE IN 20 JANUARY REPORTED IN CHINA DAILY OF 21 JANUARY, MOFERT SPOKESMAN ZHOU JIE TOLD JOURNALISTS THAT CHINA'S FOREIGN EXCHANGE RESERVES, EXCLUDING HARD CURRENCY IN THE BANKS, WERE OVER USD 20 BILLION.
3.
THIS IS HALF THE FIGURE QUOTED IN NOVEMBER 1992, WHEN RESERVES WERE SAID TO HAVE REACHED ALMOST USD 45 BILLION. ACCORDING TO INFORMATION GIVEN TO THE RESIDENT DAILY TELEGRAPH CORRESPONDENT, THE REASON FOR THE LOWER FIGURE WAS THAT CHINA HAD TAKEN UP A NEW METHOD OF ACCOUNTING. RESERVES NOW EXCLUDED MONEY PLACED IN THE BANK OF CHINA BY STATE-OWNED ENTERPRISES. NOW THAT STATE-OWNED ENTERPRISES HAD GREATER AUTONOMY, THEIR MONEY WAS NO LONGER IN THE PUBLIC PURSE AND COULD NOT BE DRAWN UPON.
COMMENT
4.
THE CHINESE HAVE BEEN TALKING ABOUT DIFFERENT ACCOUNTING PRACTICES FOR SOME TIME. CHANGING THEIR ACCOUNTING METHOD NOW IS PART OF THE GENERAL STRATEGY TO BRING CHINA'S PRACTICES IN LINE WITH INTERNATIONAL STANDARDS AND MAKE THEIR ECONOMY MORE TRANSPARENT WITH A VIEW TO RE-ACCESSION TO GATT. (THEY MAY ALSO HOPE THAT USE OF A LOWER FIGURE FOR RESERVES WILL REDUCE INTERNATIONAL PRESSURE ON THEM OVER THEIR TRADE SURPLUSES.) HOWEVER THE CHANGE MAY LEAD TO EVEN LESS TRANSPARENCY. CHINESE STATISTICS ARE UNRELIABLE AT THE BEST OF TIMES. IF THE CHINESE DECIDE TO LIST ONLY THE OFFICIAL RESERVES AND NOT THOSE BELONGING TO STATE ENTERPRISES THE SITUATION WILL BE EXACERBATED. WE ARE STILL AWAITING STATISTICS FOR THE THIRD QUARTER OF 1992, WHICH SHOULD
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