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2
3.
The rapid growth of the Chinese economy so far
this year, accompanied and accommodated by monetary expansion, has resulted in mounting inflationary pressure, particularly for commodities transacted in the free market
(sometimes not perfectly legally). According to the
statistics released by the State Statistical Bureau,
(2)
consumer prices for the country as a whole rose by 7.7% in the first nine months of this year compared with the same period last year. The problem of inflation was more pronounced in cities, where consumer prices went up by 11.1% on average. The consumption boom which gathered
momentum in the fourth quarter of 1984 showed no sign of subsiding in the third quarter of 1985. In the first
three quarters of 1985, retail sales rose by 27.2% to Rmb 303.9 billion. Sales of refrigerators, television sets, electric fans, washing machines and cassette tape recorders reached record levels during this period. The
increasingly widespread use of home consumer durables has also greatly increased the domestic demand for electricity.
(1) Output of major energy items in the first three
quarters of 1985:
Coal Crude oil Electricity
Output
626 million tons 93 million tons 301 billion KWH
(2) See Annex A.
Growth rate over the same period in 1984
(8) 11.5
10
8.7
CONEIDENTIAL K