Measures for Providing Short-Term Loans in Foreign Currency by Thebank of China
Measures for Providing Short-Term Loans in Foreign Currency by Thebank of China
Measures for Providing Short-Term Loans in Foreign Currency by Thebank of China
August 30, 1980
These Measures for providing short-term loans in foreign currency are
hereunder formulated with a view to speeding up the socialist
modernization programme and, on the basis of self-reliance and by using
the foreign currency funds absorbed by the Bank of China, developing
production of exports and other economic under-takings and increasing
foreign exchange earnings as well.
Chapter I Eligible Borrowers and the Purposes for which Loans are to be Used
Article 1
Loans are to be granted to export-oriented industries and other
enterprises earning foreign exchange income directly or indirectly who can
meet the conditions for borrowing. The loans are primarily for encouraging
export-oriented industries to tap production potential and to support
their renovations and retooling old plants and equipments.
Article 2
The loans are to be used for:
a. financing imports of advanced technology, equipment and materials
essential to upgrading the borrower's productivity and the quality,
variety and packaging of export goods;
b. financing imports of raw materials and components to be processed for
export;
c. developing transportation and tourism and carrying out engineering
projects contracted in foreign countries;
d. supporting the processing of raw materials and assembling of parts
supplied by foreign buyers, and supporting compensatory trade;
e. providing short-term working capital to production projects that
generate foreign exchange directly or indirectly.
Chapter II Conditions for Borrowing
Article 3
Applicants for loans must meet the following requirements:
a. Marked economic results: Preference is given to borrowers who are able
to earn more foreign exchange in proportion to the money invested and
repay bank loans sooner Borrowers should be able to run their enterprises
efficiently, make the most of the imported advanced technology, equipment
and raw materials, tap their production potential, renovate obsolete
plants and equipment, enhance the competitiveness of their export goods in
the international markets, thereby earning more foreign exchange and
accumulate more funds for the country.
b. Assurance of repayment: Borrowers must give evidence of a reliable
source of foreign exchange income and the ability to repay loans plus
interest for which they are required to submit a schedule of repayment.
Where loans are granted to the export-goods industry, the increased output
attributed to the loan should be primarily for export and not be included
in the state domestic marketing plan. The income from the increased output
and the export proceeds in foreign exchange should first be set aside for
repayment of the bank loan. In case the goods are to be turned over to a
foreign trade corporation for export, the borrower should sign a sales
contract with this corporation which commits the latter to repay the bank
loan in foreign exchange for the borrower.
Enterprises not directly related to the export trade must submit a
document of approval signed by the competent department committing the
latter to repay the loan from its own foreign exchange income.
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