And Chinese units collecting FECs made a packet as they could convert the certificates back into foreign currency at the official yuan rate of 5.8 to the US dollar, compared with a black market yuan rate which was hovering above eight yuan to the dollar.

Seeking to protect the foreign currency value of their revenue following the 50 per cent devaluation from 5.8 to 8.7 yuan to the dollar on January 1, numerous Chinese groups have raised prices for foreigners.

In some cases, the new prices more than compensate for the devaluation.

At least one government agency, Beijing's Telegraph and Telephone Bureau, raised prices by 50 per cent for foreign companies settling in yuan instead of FECs.

Foreigners have been scrambling to find out whether these increases are legal, following an ambiguous government statement which suggested that they might not be.

''No price rise is legal without permission from relevant departments in charge of commodity prices,'' the central bank said in a circular last week.

''There must be many problems which need to be worked out gradually when there is such a sudden change,'' said Yang Gonglin, director of the policies and regulations department of the State Administration for Exchange Control which, along with the central bank, is responsible for foreign exchange policy.

Asked whether the price increases were legal, Mr Yang was evasive. ''I cannot judge whether they are reasonable or not. I know there are strong reactions among foreign friends in China towards the price increases of yuan payments after the FEC was abolished, and I am trying to report this to the central bank and State Council objectively,'' he said in a telephone interview.

But some businesses began offering discounts for customers paying with FECs, the value of which collapsed last week but now has nearly recovered following statements of official support.

Dollar business has been anything but brisk as street traders hedged their bets amid unconfirmed rumours that access to foreign exchange would be liberalised sharply in coming days.

''Not many of us are trading in dollars right now,'' one woman in Beijing's busy Sanlitun black market said.

''I've heard that after 40 more days anyone will be able to buy dollars from the Government, so it's not worth the risk.'' A few Sanlitun street traders were selling the dollar for 8.75 yuan, up from 8.65 yuan on the eve of the January 1 deregulation.

The 8.75 yuan rate also represents a slight premium, 0.05 yuan, over the central bank-sanctioned floating rate.

In Shanghai, black market traders quoted a rate of 8.78 yuan.

In Beijing, entrance to the Forbidden City is now 45 yuan compared with 45 FECs formerly, but a ticket seller said the tourist site was considering a price increase.

According to the new rules, Chinese units are no longer authorised to make charges in foreign currency. However, an official at the Foreign Enterprise Service Corp (FESCO), which supplies labour to foreign representative offices, said the unit had received special government approval to make charges in US dollars.

Formerly, FESCO made charges in FEC, while paying a fraction of its receipts back to the Chinese workers in yuan.

The Diplomatic Service Bureau, which supplies staff for embassies and foreign journalists, said it would continue to charge foreigners in US dollars.

Most foreign businesses give their staff bonuses, which used to be paid in FEC. Now they are under pressure from staff to increase these bonuses so that their value remains the same in foreign currency terms.

Joint ventures which have been paying their local staff in yuan will not see their payrolls affected by the currency unification.

But those joint ventures taking revenues in yuan will find their profits slashed when they convert back into foreign exchange at the new rate.

Foreign businessmen are concerned that if the yuan comes under pressure, the Government may restrict the amounts which joint ventures can convert into foreign currency.

Unification of the exchange rate has created several other areas of confusion. Foreign and Chinese businesses are having to take another look at joint-venture deals agreed but not executed, to see how the new policy will affect them.

''I think foreign partners will want to get some terms renegotiated,'' said a Western accountant.

''We're looking at what effect this change will have on us,'' said an American lawyer.

''We're not getting any answers at this point. No one has offered a great deal of clarification. Chinese officials are also confused,'' the lawyer said.

Despite the confusion, businessmen say the new unified currency is a welcome reform.

''In the long run, China is going in the right direction, because the unified currency can simplify a lot of things,'' said a foreign businessman.