CHINESE enterprises will continue to be plagued by a shortage of working capital for the rest of the year as the Government diverts funds to the agricultural and construction sectors, China's central bank warned yesterday. In a 102-page report titled China Financial Outlook '94 , the People's Bank of China identified the key problems as excessive money supply, inflation and China's increasing foreign debt, which is expected to exceed US$100 billion (HK$772 billion) for the first time this year. The report said continued restrictions on bank lending would be another major headache, causing many state-run enterprises to have a shortfall in working capital. Loans to agriculture and key construction projects would take priority this year increasing by about 30 per cent compared with the first half of last year, much higher than had previously been budgeted for. ''Therefore, loans for working capital in 1994 go down to 14 per cent [of total loans issued in 1994], leaving a remarkable shortage of loans for working capital,'' the report said. Foreign bankers hailed the report as a step forward in improving the transparency of the working of China's financial system. In tackling inflation, the central bank's policy of high interest rates and tight control over credit and money supply should begin to yield positive results in the latter half of the year, the report said. ''We can expect the inflation rate in general to go down in 1994, although there may be fluctuations and the average inflation rate for the whole year may remain at a high level,'' it said. The bank pledged to improve its control over money supply by reducing the number of unsecured loans and increasing the number of rediscount and mortgage loans. A money supply monitoring system would also be set up to more adequately forecast the amount of money circulating in the national economy. The bank's report, edited by its deputy governor, Chen Yuan, outlined the economic and financial situation last year and the prospects for this year and included reports on financial reform measures and changes in financial legislation. The report said it was not ''optimistic'' about China's rapidly growing foreign debt, but said with continuous growth in exports and direct foreign investment in China, foreign exchange reserves should continue to grow. Moreover, since the transition of specialised state-run banks into commercial banks had not been completed, loans to state-run enterprises were still not being extended on a purely commercial basis. As such, the report said, the central bank might have to increase base money supply. Foreign bankers in Beijing welcomed the report as a step in the right direction. ''In the past we have had to rely basically on press reports and leaks from banking officials to determine what the Government's financial policy was, but this report at least gives us a good indication of where we stand on the major issues,'' a European bank representative said. An American banker added: ''I think it shows the People's Bank is determined to become more open in its dealings with the international banking community, to become more user-friendly, so to speak.'' In particular, foreign bankers welcomed the comparative lack of overt government propaganda in the report. Also yesterday, China's State Statistics Bureau reported that the country's industrial output increased 15 per cent in July from last year, reaching 132 billion yuan (HK$118 billion). But the state-owned sector only turned out 84.5 billion yuan of industrial products last month, representing a mere five per cent growth from last year's output. The official China News Service blamed the poor performance on the Government's control over fixed assets investment.