TNAG-2792-FCO40-4031-Relations-between-Hong-Kong-and-China-1993 — Page 69

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CONFIDENTIAL #

13

of US$200

million

and a technical

stage

assistance grant of US$450,000 for the second

In addition, a loan

development of the

were

Guangzhou Pumped Storage Power Station

ADB.

Meanwhile,

under consideration by the

discussions were underway between the ADB and China's

Ministry of Communications for a US$150 million loan to

be laid on

enable

fibre-optic cables

to

Beijing-Taiyuan-Xian and Beijing-Wuhan-Guangzhou routes.

the

15.

(e) "16-point plan" announced on 3 July

structural

So

in Annex 1)

The "16-point plan" (see details

announced by the Chinese government on 3 July is aimed at

cooling down the overheated economy, redressing the

imbalances, and restoring the chaotic financial

sector to discipline. Judging from the restraint measures

indicated, they are meant to be selective and regulatory

in nature. An across-the-board austerity programme in the

same mode as the previous one started in 1989 is not

envisaged. The government's stated intention is to bring

the overall economic growth back to a more sustainable rate of 8-9% per annum, in line with the trend rate adopted in

the current five-year plan. Over the past two months or

so, improvements on a few fronts have been observed. The

market exchange rate of the Renminbi has rebounded and

stabilised at around Rmb 8.7-8.8 per US$. Activity in the

property market and the building sector has slowed down considerably. The prices of essential building materials

like steel bars and cement have fallen. The Rmb 30 billion

treasury bonds have been fully subscribed.

estimated total of Rmb 200 billion originally earmarked as short-term funds but improperly loaned out by the banks to longer-term development and real estate projects earlier in

the year, around one-third has been successfully recalled

by the initially stipulated deadline of mid-August, and the

remainder is required to be redeemed by the extended aggregate supply and demand,

deadline of

end-1993.

On

As to the

CONFIDENTIAL #