5.
As regaras agricultural production, grain output declined by 7% in 1985, its first decline in seven years.
Cotton output also fell, from 6.22 million tons in 1984 to
4.15 million tons in 1985. Meanwhile, the harvest of cash
crops such as jute, tobacco and rapeseed recorded sharp
increases.
6.
Reflecting the buoyant economic activities in
1985, average per capita income in the urban sector rose
by 10% in real terms and that in the rural sector by
9.58. Much of the increase in rural income is derived
from rural industries, the total output of which was 35% higher than in 1984. But it appeared unlikely that the growth in average per capita income had been evenly
distributed, given the agitation among the Chinese public
about price increases. Nevertheless, the marked increase
in income, in turn, has stimulated consumption.
Retail
sales in 1985 reached Rmb 431 billion, representing an increase of 28% in value terms or 17% in real terms over
1984.
7.
The rapid growth of the Chinese economy and the relaxation of price controls on some commodities, accompanied and accommodated by monetary expansion, particularly in early 1985, has resulted in mounting
inflationary pressure. The inflation rate was estimated
to be around 9% in 1985. The State Council announced in November that there would be no further major price reforms in 1986. During 1985, the number of products covered by state mandatory planning was cut from 123 to 63 and the share of industrial production under the state's quantitative planning was reduced from 1/3 to 1/5.
appears that the Chinese economy now needs some time lu
adapt to the changes brought by the price reforms
introduced in 1984 and 1985.
It
CONFIDENTIAL #B