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Warning on short-term foreign debt

State Administration of Foreign Exchange (SAFE) head Guo Shuqing warned that short-term loans as a percentage of total foreign borrowing were too high and exceeded international risk benchmarks. He did not get into specifics. But in 2003, short-term foreign loans were US$77 billion, 38.1% up on 2002. Nearly 40% β€” 39.8% β€” of 2003 borrowings were classified as short-term, as against 32.6% in 2002. Speculators, banks among them, are blamed for the current spike in short-term forex borrowing as expectation of an RMB revaluation builds.

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