The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Jingwei Textile hurt by war on excess spindle capacity
Jingwei Textile Machinery said net profit fell 78.01 per cent to 7.69 million yuan (about HK$7.15 million) last year, hit by slow demand for spindles and a government policy of disposing of spindles.
Turnover fell 30.27 per cent to 409.63 million yuan.
Earnings per share fell to two fen, against eight fen. No dividend will be paid.
Vice-chairman Liu Shitong said yesterday: 'The year 1998 was the most difficult year for our company, and it was also a year in which our company made a breakthrough in adjusting our operational policy and product mix, developing new products and expanding exports.' Jingwei, the mainland's largest textile-machinery manufacturer, suffered a loss of 184 million yuan in turnover for its key product - cotton-spinning frames - under Beijing's policy of suppressing demand for spindles.
The company was also hit by reduced economic efficiency and heavy losses of many textile-manufacturing firms, in addition to a domestic price war amid an over-supply of textile-machinery products.
Average product prices fell about 10 per cent last year, Mr Liu said.
Chief finance inspector Yao Yuming said its account receivables - money owed for goods sold - grew last year by about 40 million yuan to 180 million yuan.
Inventories rose to 310 million yuan from 260 million yuan in 1997.
Mr Yao said the company was confident account receivables would be reduced this year, to 140 million yuan, and inventories would be contained at lower levels.
The company has working capital of about 120 million yuan, which Mr Yao said was sufficient to cope with present capital needs.
Debt-to-equity ratio was lowered from 39 per cent to 36 per cent.
The firm said it expected to benefit from the gradual abolition of export quota restrictions on mainland textile products after Beijing's entry into the World Trade Organisation.