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CONFIDENTIAL
037262
MDHIAN 2677
THE FIRST HALF OF THE YEAR, CHINA'S TOTAL INDUSTRIAL OUTPUT ROSE BY 18 PERCENT IN VALUE OVER THE SAME PERIOD IN 1991. THE COMPARABLE FIGURE OF GUANGDONG WAS AN EVEN MORE IMPRESSIVE 27 PERCENT. DEMAND FOR HONG KONG GOODS AND SERVICES TO SUSTAIN CHINA'S PERFORMANCE HAS BEEN BRISK ENOUGH FOR THE BUSINESS COMMUNITY TO IGNORE WORRIES WITHIN CHINA THAT INFLATION MAY RETURN TO DANGEROUS LEVELS.
SLACKER PRICES AND WAGES
IN
8. THE PUBLIC AT LARGE TENDS TO TAKE HEART FROM BOOMING SHARE PRICES AND A BUOYANT ECONOMY, WHATEVER THE POLITICAL CLIMATE. RECENT MONTHS, THERE HAS BEEN ADDITIONAL CAUSE FOR COMFORT AS INFLATIONARY PRESSURES HAVE EASED. IN APRIL 1991, THE CONSUMER PRICE INDEX (A) WAS 13.9 PERCENT HIGHER THAN IN THE PREVIOUS APRIL. SINCE THEN, THE INDEX HAS SHOWN A GRADUAL DOWNWARD TREND. THE INCREASE FOR MAY THIS YEAR WAS DOWN TO 8.8 PERCENT OVER THE SAME MONTH IN 1991. THE COMMUNITY IS NOT YET CONVINCED THAT THE INFLATIONARY THREAT HAS BEEN OVERCOME. RESPONDENTS TO THE CNTA OPINION POLL IN MAY LISTED THE COST OF LIVING AS THEIR SECOND BIGGEST CONCERN (AFTER THE ROBBERY RATE). NEVERTHELESS, CNTA POLLS RECORD THAT PUBLIC ANXIETY ABOUT INFLATION BEGAN TO SLACKEN DURING THE FIRST FIVE MONTHS OF THE YEAR.
9. THERE IS ALSO SOME EVIDENCE THAT THE ACUTE LABOUR SHORTAGE HAS PASSED ITS PEAK. THE UNEMPLOYMENT RATE ROSE TO 2.1 PERCENT DURING THE FIRST QUARTER OF THE YEAR (COMPARED WITH 1.7 PERCENT IN THE FINAL QUARTER OF 1991). THE TOTAL NUMBER OF WORKERS IN EMPLOYMENT SHOWED A SLIGHT FALL. FOR THE BUSINESS COMMUNITY, THESE FIGURES ARE ENCOURAGING EVIDENCE OF AN EASIER LABOUR MARKET.
10. THE COMMUNITY, HOWEVER, HAS BECOME SO ACCUSTOMED TO AN UNEMPLOYMENT RATE BELOW 2 PERCENT THAT THE FIRST-QUARTER RISE IN THE NUMBER OF JOBLESS WAS SEEN AS A CAUSE FOR ALARM BY SPOKESMEN FOR THE LABOUR FORCE, ESPECIALLY AS REAL EARNINGS HAD FALLEN DURING THE SECOND AND THIRD QUARTERS OF 1991. DURING THE FIRST QUARTER OF THIS YEAR, REAL EARNINGS ROSE BY 1.4 PERCENT COMPARED WITH THE SAME PERIOD IN 1991, EASING ANXIETIES ABOUT THE EFFECT OF A LESS TIGHT LABOUR MARKET. NEVERTHELESS, LABOUR SENSITIVITIES REMAIN HIGH, STRENGTHENING OPPOSITION TO THE IMPORTATION OF THE NUMBER OF WORKERS NECESSARY TO OVERCOME THE MAJOR OBSTACLE TO RAPID GROWTH WITHOUT INFLATION.
CONSTITUTIONAL DEBATES
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