CONFIDENTIAL #

CRC INF 12/91 (CEC 11/91)

Report on Developments in Hong Kong-China Economic Relations Second Quarter of 1991

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(I) General economic developments in China

(a) Overall view

in the second

China's economy remained buoyant quarter of 1991, but with mounting inflationary pressures. Reflecting a buoyant economy, China was importing more and

hence its visible trade surplus was reduced significantly

first two quarters of 1991. The strong inflow of

direct foreign investment continued into the second

quarter.

in the

Both the Chinese government and enterprises took advantage of the favourable external environment to raise

more funds in the international capital market.

2.

gross

(b) Domestic Sector

In the first half of 1991, the value of China's

national product (GNP) was estimated at Rmb,820.7 billion (at current prices), representing an increase of

6.1% in real terms over the same period in 1990. China's gross industrial output was estimated at Rmb 1,126 billion

(at constant (1990) prices, excluding output from village-run enterprises), representing an increase of 13.4%

in real terms over the first half of 1990. Such rapid growth rates could be attributed mainly to a continuously

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CONFIDENTIAL

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