INFORMATION ON MONEY AND BANKING IN CHINA, 1952

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700120214-9
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: September 13, 2011
• Sequence Number: 214
• Publication Date: July 27, 1953
• Content Type: REPORT

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SECURITY--IIPFOHAfATION
^FNTRAL INTELLIGENCE AGENCY REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
COUNTRY
SUBJECT
HOW
China
DATE OF
INFORMATIO
Economic - Money, banking
DATE DIST.
N 1952
a7.7u1 1953
PUBLISHED
WHERE
PUBLISHED
DATE
PUBLISHED
Yearbook
Hong Kang NO. OF PAGE
5 Feb 1953
S 3
LANGUAGE
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SUPPLEMENT
Chinese REPORT NO.
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SOURCE 1953 Ching-chi Nien-pao (1953 Economic Yearbook).
INFORMATION Oft MONEY APID BANKING IN CHINA 1952
~ommeat: This report summarizes an article entitled "The
Development and Accomplishments of Money and Banking in New .China
for the Past Year," by Hsu Kuang published in the pro-Communist
1953 Ching-chi ftien-pao (1953 Economic Yearbook), 5 February 1953?
The report gives details, figures, and statistics on currency
control, band loans, interest rates, and rural credit organi.za-
tioas in China)
A. Currency Control
After the Government Administration Ccuncil promulgated currency control
in 1950, the state banks launched an o?r?r-Er!..1 drive to get new accounts and to
control receipts and expenditures, State banks achieved order in the financial
system, centralized loans, and supervised inves+,ment in basic construction.
A11 transactions between state-operated enterprises and private industries had
to go through state banks, which became the center of currency exchange. At
present, most of the state-operated enterprises deal with state banks for loans.
From 1950 to September 1952, there was a great increases in deposits in state
banks. This is illustrated by the following statement from flsueh-het, No 7,
1952, Page 5:
"The state banks developed extensively during the past 3 years. They now
have control of 90 percent of total deposits and loans in China, and 98 to 99
percent if public and private Joint-operated banks are included."
In October 1952, the People's Bank of China held a conference to discuss
currency control. A decision was made to improve the 1953 regulations for loan
and settlement.
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The new loan regulati.one incorporated the following provisions:
1, she state banks are to increase loans to industrial enterprises and
marketing cooperatives, to assist state-operated enterprises, to carry out the
auditing system, and to increase the rate of capital turnover.
2. Five types of loans are to be made in banks according to the needs of
industrial enterprises. These loans include fixed loans, seasonal loans, settle-
ment loans (loans granted during settlement process), large-scale alteration loans,
and short-term loans.
3. Detailed calculations are to be made to determine the amount and term
of loans according to needs.
4. Loan methods and procedures are *.o be simplified. Besides using
materials of Large alterations as guarantee for alteration loans, fixed or current
assets are used as collateral for the o';;her types of loans.
The aev loan settlement regulst,ions aid in stabilizing the auditing system.
Mhere are eight types of settlement: check settlement, certified check settle-
ment, collection settlement, term settlement, acceptance settlement, telegraph
and mail remittance settlement, special i.:~ount settlement, and credit certifi-
cate settlement.
The increase in state bank loans is indicated by the following quotation
from the Chunx-Kuo Chin-yang, 90 10, 1952, page '_:
"Since the beginning of May 1952 when the number of loans were increased,
total state bank loans reached 3 trillion yuan in August 1952. Over 80 billion
yuan were loaned to 9,000 business enterprises 1n Peiping, and over 200 billion
yuan were loaned to 12,000 business enterprises in Tientsin. Over 700 billion
yuan were loaned to business enterprises in Shanghai; over 100 billion yuan in
Wuhan; and over 100 billion yuan in Chungking."
Because the govermnent took steps to promote econou~y by increasing work,
ordering more goods, and by granting loans, the business enterprises were quickly
reconstructed and developed. In August 1952, industrial production in the
Shanghai area reached the production level of December 1951. By the end of August
1952, loans granted by Shanghai banks totaled 7,500; the gold backing was
118 percent greater than in December 1951, and 165 percent greater than in March
1952. Loans to light and heavy industr].es were 10 percent greater than in
December 1951.
In 1952, loans granted to merchants at commodities exchange conferences were
greater than in 1951. For example, 38 percent of total loans in Shantung were
granted to merchants at commodities exchange conferences; 35 percent, in Wuhan;
21 percent, in Shanghai; 17 percent, in Fukien; and 13 percent, in Anhwei.
State bank loans to assist trade amoun~ to 60 percent of the total state bank
loans. '
C. Lowering Interest. Rates
On 25 June 1952, the state bank announced the new interest rates which are
20 to 50 percent lower than the old interest rates. The new interest-rate
schedule is as follow:
1. The month]y interest rate is Prom 1.05 percent to 1.65 percent on loans
to private industry.
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2. The monthly interest rate is from 1.35 percent to 1.95 percent on loans
to private business enterprises.
3. The monthly interest rate is from 0.6 per. cent to 1.2 percent on loans
to publicly operated enterprises.
4. The interest rate on savings accounts vas increased.
5. The month>,y interest rate is from 1 percent to 1.5 percent on farm loans.
6. The monthly interest rate is from 0.7 percent to .75 percent on water
conservation loans.
7.. The cooperatives, in contrast to publicly ovned enterprises, are given
a 10-percent advantage on the interest rate on loans to assist is the develop-
ment of the cooperative econoigy.
D. Rural Credit Organizations
Three types of rural credit organizations are as follovs:
1. Credit Mutual Aid Teams -- Small-scale cooperatives vhich deal vith
currency and ezehange within the mutual aid teams.
2. Credit Union of Supply and Marketing Cooperatives -- Credit unions
formed by the members in the cooperatives. The cooperatives furnished part of
the credit union's capital, and the state bank supervises and aids the credit
union in financial management.
3. Credit Cooperatives -- Large-scale cooperatives vhich proaote mutual
aid production, handicraft industries, and lo:el products industries.
Under the leadership of state banks, there has been much development of
rural credit organizations is 1952? In November 1952, there were 8,124 rural
credit organizations is China. Comparing the figures of May 1951 with 1ovember
1952, the"number of credit mutual aid teams increased Prom 69 to 5,239; credit
unions of supply and marketing cooperatives, from 610 to 1,121; and credit
cooperatives, from 97 to 1,764.
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