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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (32737)	10/29/1998 6:50:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 94695

David more reason to cheer, at a bank near you <gggg> Friday October 30 1998 Mainland debt soars WANG XIANGWEI The mainland's official foreign debt jumped sharply in the year to June, adding to concerns that Beijing will further crack down on companies involved in unauthorised overseas borrowing. As of June 30, foreign debt was up 16.3 per cent year on year to US$137.96 billion, official statistics showed. The surprising growth rate - compared with single-digit growth during the past few years - was revealed as concerns mounted over ballooning unregistered foreign debts which are not included in the official count. Economists said unregistered debts could be $30 billion or higher. The mainland's foreign debt levels, official and unofficial, are of increasing concern to the international banking community following the shutdown earlier this month of Guangdong International Trust and Investment Corp. Xinhua news agency, citing the State Administration of Foreign Exchange (SAFE), said foreign debt had risen 5.3 per cent, or $7 billion, since the end of last year. From $118.64 billion as of June 30 last year, foreign debt increased 16.3 per cent, or $19.32 billion, on a year on year basis. The figures indicate the mainland went on a borrowing spree in the latter half of last year even though the first signs of the Asian financial crisis emerged in Thailand in July last year. Still, economists said Beijing was prudent in controlling the size and management of its foreign debt, with most debt indicators below international standards. SAFE figures show medium and long-term debts of $120 billion accounted for more than 86 per cent of the total, up $7.16 billion from the end of last year, while short-term debt was $17.96 billion, a decrease of $160 million. In the first half of this year, the mainland borrowed $24.89 billion overseas while repaying principal and interest on $21.89 billion. Of the debt, sovereign borrowings by ministries under the State Council rose 5.6 per cent to $37.99 billion from the end of last year, while that of domestic financial institutions fell 4.9 per cent to $40.46 billion. "What has been worrying the mainland government instead is the so-called hidden foreign debts or the debts which are borrowed by mainland entities but not registered with the SAFE," Standard Chartered Bank senior economist Liao Qun said. "Not even the government has any clue as to the amount of unregistered foreign debts, let alone outsiders." He estimated those debts ranged between $20 billion and $30 billion. Morgan Stanley Dean Witter senior economist Andy Xie Guoshong said many unauthorised foreign debts had been ploughed into infrastructure projects in the form of foreign direct investment (FDI). Those projects guaranteed certain annual returns to foreign investors as repayments of principal and interests. SAFE has started to plug the loophole by reclassifying such FDI as foreign debt and asking borrowers to register. Mr Xie said from 1994 to last year, about $154 billion in FDI was poured into mainland infrastructure projects. How much of this was foreign debt remains unclear. Mr Xie said: "Unchecked growth in unregistered foreign debts would threaten the financial security of the country and Beijing will definitely clamp down harder."