12.
13.
14.
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managing to meet 80% of its demand. Govt Econ said that in HK we operated with 25-30% above our need so that emergencies and maintenance could be coped with.
S for T felt that the 'Guangdong factor' let the HK Government down in terms of planning of infrastructure. Their standards were below HK and this could inhibit our
developments. For example, China had not planned the
border crossing at Lok Ma Chau very well. C for CE
informed members that he had heard, unofficially, that
Lok Ma Chau would not be operational until September 89
as opposed to the previously planned April 89.
When the CS asked for an update on progress on the Guangdong super highway, S for T replied that there was
none. The first small section was being worked on but
Gordon Lu was still looking for finance for the rest of
the project.
Report on Inflation in China and its implications for
the Economies of China and Hong Kong (Paper CRC 13/88)
Govt Econ said that the real problem China was facing
today was that of inflation. It was putting the reform
programme to the test. In the first half of the year
inflation was 13% overall. In June it had been up to
19%.
Ag S for S commented that the implication of a
Balkan economy was that inflation would vary from
province to province. Govt Econ said in answer to Ag PA'S query that China did have a National Index but that
he was not sure how it was put together. The consumer
price index was produced by the Statistical Bureau and
it was this index which had risen to 19%.
15.
The causes of the rising inflation were excess demand
and the restructuring of the price system. The Chinese
leaders had been taken by surprise by the results of the
economy growing so rapidly. It was like letting a tiger
out of the cage with no idea how fast it could run or
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