Cilostazol reduces platelet aggregation and prevents formation of blood clots. Furthermore, cilostazol treatment has been shown to reduce serum triglyceride concentrations and increase HDL-cholesterol levels. In this randomized placebo-controlled, double-blinded study, the investigators hypothesize that Cilostazol may reduce the rate of decline in renal function in Chinese patients with type 2 diabetes and mild to moderate renal impairment. Sixty patients will be randomised to receive either Cilostazol 100 mg twice daily or placebo for 12 months. The effect of Cilostazol on the progression of diabetic nephropathy, as defined by rates of decline in glomerular filtration rate, serum creatinine and urinary albumin excretion rate will be measured. The results will provide additional insight on the management of diabetic kidney disease which is prevalent among Chinese diabetic patients in Hong Kong.