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historically high levels and surpassed the previous peak. of US$16.7 billion recorded at the end of September 1984.
12.
While the adoption of the Coastal Region
Economic Development Strategy has led to further
liberalisation of China's foreign trade regime and is
likely to provide added stimulus to its external trade, it
is doubtful whether the current high growth rate of
China's exports can be sustained for much longer.
Domestic inflation is likely to have the effect of
shifting the resources to the domestic sector from the
external sector, unless the differential rates of
inflation between China and its major trading partners are
offset fully by a depreciation of Renminbi or exports are
even more heavily subsidized.
13.
Against the background of China's overheated
domestic economy and facilitated by an improvement in its
visible trade balance and foreign exchange reserve
position, further liberalisation of the foreign trade
regime is likely to result in some relaxation on its import restrictions. This would allow imports to be used
to meet part of the unsatisfied demand existing in China's economy. This may have some favourable impact on Hong
Kong's exports to China (for further details, please refer
to paragraphs 33 to 36, and paragraphs 44 and 45 of
CEC 7/88 "Inflation in China and its implications for the
economies of China and Hong Kong").
14.
(c) Development of China's financial sector
(i)
Loans and money supply
Measures taken by the People's Bank of China in October last year to curb runaway credit and monetary expansion had some success, though the growth rates of the
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