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CONFIDENTIAL
economic situation or because of their inability to make proper
use of allocations for the far harder task of technical
transformation. Non-productive capital construction accounted
for 45.5% of the total in 1982. Local banks have also been
given more freedom of decision and total loans have risen
rapidly. Too often this has resulted in duplicative production
and an appalling waste of manpower and materials.
some key State capital construction projects have been lagging
behind schedule.
Meanwhile
11. Yao stated that there had been too much decentralisation
and that dissipation of China's limited resources could not
continue in this way. There will now be tighter centralised
control over capital construction. Financial revenue as a
proportion of national income, which fell from 37.2% in 1978
to 25.5% in 1982, is to be raised again. Bank loans will be
strictly controlled and major cities are to have greater powers
over enterprises for purposes of planning and coordination.
While capital construction in general will be curbed, investment
in key projects will increase. Energy and transport are to
receive 39.4% of total investment in 1983, compared with 28.6%
in 1982. Top priority will also be given to light industry,
whose growth rate of 4.7% in January to May over the equivalent
period of 1982 is only just adequate.
12. Another problem which is to receive continued emphasis will
be enterprise reorganisation. Renewing the leaderships of
CONFIDENTIAL
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