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CONFIDENTIAL #
livestock) in July 1988
(24)
•
25
It will take time to
observe how seriously retail prices in Hong Kong will be affected. The influence of China's export prices on Hong Kong's domestic cost/price structure is probably declining because China as a source accounted for only about 30.4% of Hong Kong's total retained imports of foodstuffs in 1987 and this proportion declined to 28% in the first half of 1988. For all categories of products, China's share in Hong Kong's total retained imports also declined, to 11.4%
Further, the in the first half of 1988 from 17% in 1987. scope for China to raise the prices of its exports to Hong Kong is to a large extent constrained by possible consumer resistance in Hong Kong and by the availability of substitutes from other sources.
(24) In July 1988 the year-on-year rate of increase in the consumer price index for Chinese goods shot up to 13.4%, this represented a sharp acceleration from 7% in the first half. This was largely due to the increase in the price of pork, which was reported to have been caused by supply shortage due to railway But the pork transportation problem in Guangdong. price has remained at that new higher level since then, notwithstanding that conditions on the railway in Guangdong have returned to normal. Another contributory factor to the sharp acceleration in July was the low base for comparison in July 1987. Comparing July 1988 with June 1987, the rate of increase was only 9.6%.
Year-on-year rate of increase
(*)
Consumer price index
for China goods (Oct 84-Sept 85
*
100)
1987
1988
January
98.4
102.0
3.7
February
97.4
105.2
8.0
March
97.5
105.1
7.8
April
99.4
106.7
7.3
May
97.5
105.7
8.4
June
99.9
106.1
6.2
July
96.6
109.5
13.4
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