State Development Planning Commission, People's Bank of China and State Administration of Foreign Exchange, Adjusting the Management and Structure of the Foreign Debt Risks of State-owned and State-controlled Enterprises Guiding Opinion

Issued: July 8 2002

Main contents: The Opinion states that enterprise foreign debt safety is the basis of national foreign debt safety (Section One). After pointing out certain current problems of State-owned enterprises in respect of foreign debt risk management, the Opinion specifies the principal objectives and contents of foreign debt risk management (Section Three). The Opinion also sets out specific policies to encourage State-owned enterprises to take advantage of the low interest rate environment by borrowing at current low interest rate to repay high-interest debts (Section Five). These policies include streamlining the procedures for approving such debt structure adjustment, permitting well-positioned State-owned enterprises to obtain foreign exchange for such purpose through domestic issue of foreign currency and local currency debentures, permitting State-owned enterprises to engage in forward foreign exchange transactions with wholly Chinese-owned designated foreign exchange banks for hedging purposes and permitting State-owned enterprises that have regular foreign exchange receipts to open designated foreign debt repayment accounts.