Beijing's vice-finance minister explains why Gitic was shut down

PUBLISHED : Wednesday, 14 October, 1998, 12:00am
UPDATED : Wednesday, 14 October, 1998, 12:00am

Lou Jiwei, Beijing's vice-finance minister, last night said it was central bank policy not to guarantee unregistered foreign debts by mainland firms, and that was why Gitic was shut down.

Mr Lou said: 'There is a basic principle. If it is a registered foreign debt, the policy is always the same. The company must pay the debt, but if it can't, the central bank will guarantee the repayment.' If it is not a registered foreign liability, then he said the central bank could not be expected to provide a safety net and the mainland company concerned would be left to the fate of market forces and possibly close.

Speaking at the World Economic Forum's East Asia summit in Singapore yesterday, Mr Lou said: 'Foreign debts have to be registered.

'Companies are aware of this and investors are aware of this regulation.'