CONFIDENTIAL
- 6 ·
10.
While agreeing that inflation represents the
(10) "principal contradiction" in China's economy, most Chinese leaders appear anxious to maintain a reasonable
rate of growth in 1989. This is presumably because,
notwithstanding the onset of many new problems, the most
remarkable achievement in the past ten years of reform has
been the expansion of the economy, resulting in increased
per capita incomes. Thus, sacrificing most of the growth for the sake of price stability is apparently not
considered desirable. This attitude is evident in the
forecasts for 1989 announced by the State Council on 13
January : 7.5% for GNP (3.7 percentage points lower than
in 1988), 8% for gross industrial output (9.7 percentage
points lower than in 1988) and 4% for gross agricultural
output (one percentage point higher than in 1988). For
inflation, the State Council's forecast for 1989 was in
the range of 13.5-15.5% (three to five percentage points
lower than in 1988).
(c) External sector
11.
While the slowdown in the growth rate of China's
exports continued into the fourth quarter of 1988 (only 13% in the fourth quarter), the growth rate of its imports
(10) In Communist philosophy, at any point in time there
exist many contradictions (i.e. problems). But only one of these is of principal or primary importance. Other less important contradictions are relegated to secondary importance. Thus, at any point in time the Communist Party should devote most of its resources to solving the principal contradiction. present, this is inflation.
At
GF 323
CONFIDENTIAL
機密