CONFIDENTIAL #2
2
while the output of some key industrial raw materials recorded substantial increases
(1)
3.
It seems that the two other major bottlenecks, telecommunications and transport, remained under pressure, despite some recent improvements. Telephone direct dial between major cities in China including Beijing, Shanghai, Guangzhou, Tianjin, Fuzhou, Xiamen and Qinhuangdao is scheduled to be introduced in June this year
4.
(2).
As regards agricultural production, subsequent
Second,
to the drop of 7% in grain output last year, the Chinese government has recently announced several measures to boost grain production. First, part of the receipts from profits tax and commercial tax on township industries will be used to finance agricultural investment. households entering into contracts for producing grain will be given preferential treatment in obtaining state-subsidized chemical fertilizers and in getting loans to finance their purchases. This arrangement is particularly attractive to the farmers because chemical fertilizers are generally in short supply. In 1985, the output of chemical fertilizers and of insecticides fell by 9.9% and 33.6% respectively. The corresponding declines
(1) Comparing the first quarter of 1986 with the same period in 1985, the output of crude oil, coal and electricity rose by 2%, 1.1% and 7.6% respectively. The corresponding growth rates for pig iron and steel were 13.2% and 10.5%.
(2) Direct dial systems between Hong Kong and various
Chinese cities including Guangzhou, Tianjin, Fuzhou and Xiamen are now in operation. This service was to have been extended to Beijing and Shanghai by the end of May, but delayed progress has led to the postponement of the implementation date to some uncertain time in future.
CONFIDENTIAL*