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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (44547)	1/25/1999 5:27:00 PM
From: Earlie	Read Replies (1) \| Respond to of 132070

MB: Saw it and laughed loud and long. (g) It was the source of this info that created the humour. (probably didn't even recognize that they were providing a small "hurt" to their client) (G) Best, Earlie

To: Knighty Tin who wrote (44547)	1/25/1999 5:27:00 PM
From: wlheatmoon	Read Replies (1) \| Respond to of 132070

prolems in China. from Financial Times. China postpones petrochemical push By James Kynge in Beijing China has postponed plans to expand production of basic petrochemicals, marking the latest blow to foreign investment in the faltering Chinese economy. The decision is likely to delay projects worth billions of dollars. It follows other moves by the Chinese authorities, which threaten to restrict inward investment in mobile telecommunications, retailing and insurance. Worries about the economy prompted a fresh round of jitters about possible devaluation of the Chinese currency yesterday. But Zhu Rongji, the Chinese premier, said the government would 'continue to adhere to its policy of not devaluing the renminbi', according to state television. Chinese officials and executives from international corporations said chronic oversupply in Asia's petrochemical markets, low product prices and financial problems at some state-owned Chinese companies had reduced the attraction of many planned petrochemical projects. 'We have had to alter our industrial policy [in petrochemicals]. The international prices are so low that it would be difficult to make money,' said a Chinese chemical industry official. Among the projects affected by the policy change are BP Amoco's planned $2.5bn joint venture petrochemical complex at Jinshan near Shanghai, and BASF of Germany's planned $3.6bn joint venture to build a large-scale ethylene cracker in Nanjing, in the south east of China. Bryan Sanderson, group managing director of BP Amoco, said in an interview that the start of production at an acrylonitrile (a cotton substitute) facility planned as the first unit of the Jinshan complex might be delayed by two years to about 2003 because of unfavourable market conditions. The rest of the Jinshan project, which is awaiting approval from the state council (cabinet), may also be put back. BASF had been hoping for government approval for its 600,000 tonne ethylene cracker in Nanjing by the end of last year. But the company said that negotiations on the deal were still continuing and no end was in sight. But an official added: 'I would not say formally that there is a delay'. Royal Dutch/Shell's $4.5bn petrochemical joint venture in the southern province of Guangdong, may also run into some delay. The plant received government approval in February last year and was due for completion by 2003, industry executives said. But negotiations over a joint venture contract and financing are dragging and the 2003 target date now appears ambitious, analysts said. Jeremy Frearson, Shell's China representative, said that it would probably take at least another year before financing arrangements could be made. A refinery which was supposed to be built at the plant will now 'follow on subsequently depending on economics being favourable at sometime in the future', he added. Mr Frearson said that Shell was committed to the project for the long term and was enthusiastic it could make speedy progress. Industry analysts said the chief cause of the delays were local partners and not the attitude of the foreign companies. CHINA: Gitic failure starts to hurt other businesses By James Harding in Shanghai The fallout from a leading Chinese investment company's bankruptcy appeared yesterday to be spreading across China's financial industry after a prominent provincial government-backed enterprise technically defaulted on a repayment due on a loan of $80m. Fujian Enterprises told foreign creditors it would service the interest but be unable to meet the principal repayments on a syndicated loan falling due yesterday, a development likely to stoke bankers' concerns about lending to China. The technical default comes as other Chinese investment companies report difficulties honouring foreign debts in the face of a liquidity crisis caused by the retreat of international lenders from China risk following the closure of Guangdong International Trust and Investment Corporation (Gitic). Foreign banks have been calling in credit and refusing to roll over loans to Chinese companies since last October's closure of the Guangdong itic, once the well regarded investment arm of the government of wealthy Guangdong province. Reluctance to lend to Chinese enterprises has become more acute since it became clear that they would have to shoulder substantial credit losses when Gitic filed for bankruptcy last week with debts of $4.37bn. Fujian Enterprises, an investment company owned by the government of Fujian province on China's eastern seaboard, is understood to have told foreign lenders that the credit squeeze caused by Gitic is to blame for its repayment problems. The debt due yesterday was the first instalment of a $80m five-year loan led in 1997 by CCIC Finance, the Hong Kong investment bank, which Fujian Enterprises now plans to appoint as its financial adviser, Reuters reported last night. The latest difficulties at Fujian Enterprises follow reports from bankers that the company had also been unable to meet payments on a separate $70m loan maturing in 2000. Officials at other Chinese finance and investment companies confirmed widespread strain on debt repayments as foreign lenders have withdrawn credit. "The business of all itics across China has been affected by the closure of Gitic," one official at Shanghai International Trust and Investment Corporation (Sitico) said. Earlier this week, it was announced that another Guangdong-based itic, Guangdong Overseas Chinese Trust and Investment Corporation, has sought talks with foreign bankers after defaulting on a $50m syndicated loan which matured in December. The restructuring of the trust and investment sector, estimated to include more than 200 itics, is one of the immediate challenges facing Dai Xianglong, China's central bank governor, at a meeting in Beijing this week of government officials and bankers focusing on financial sector reform. One executive with a European bank in Shanghai said foreign banks will review their portfolios, the extent of their staffing for China lending and in some cases the value of their entire China operations in the light of the Gitic losses. He also said that as international lenders pull back from China in the short-term, there will be further pressure on Chinese financial institutions: "It is going to affect anybody with maturing foreign liabilities."