IX.
GENERAL ECONOMIC SITUATION
The growth of the economy was sustained in 1992.
The
gross domestic product (GDP) grew by [5] per cent in real
terms in 1992, following increases of 3 per cent in 1990 and
4 per cent in 1991. The renewal of China's Most Favoured
Nation (MFN) status in the United States in 1992 and the
successful resolution of the Section 301 negotiations between
the two countries have boosted business confidence. However,
the protracted Sino-British negotiations over the financial
arrangements for the new airport and related projects have given rise to some uncertainty.
2.
Notwithstanding the sluggish economic conditions in
some of the major overseas markets, domestic exports revived steadily since the second quarter, after showing virtually no
increase in the first quarter. For the year as a whole, domestic exports rose by about [1.5] per cent in real terms,
after an increase of 0.4 per cent in 1991. Re-exports
remained buoyant throughout 1992, growing by [25] per cent in
real terms over the previous year. The corresponding growth
rate in 1991 was 26 per cent. Many of these re-exports were
products of outward processing arrangements commissioned by Hong Kong companies to manufacturing entities in China.
3.
In the local
economy, investment spending remained robust throughout the
year. Expenditure on machinery and equipment rose sharply. However, building and construction
activity was relatively slack. Consumer spending showed a
notable increase, as household income continued to rise.
Expenditure on consumer durables registered particularly sharp growth.
4.
The labour market tightened up again in recent
quarters, after a temporary easing in the first two quarters
1992. The seasonally adjusted unemployment rate and the
underemployment rate fell back to slightly below 2 per cent.
of