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capital

inclined to impose drastic restraint measures. While the

People's Bank of China will no doubt exercise closer scrutiny over the allocation of credit, probably only those projects of a lesser desirability will be put under a tighter rein. So long as China's economy continues to grow at a rapid pace and Guangdong's economy maintains its particular dynamism, the growth impetus on the Hong Kong economy will remain strong.

40.

Despite the rising inflation in China, the

year-on-year rate of increase in the retail prices of goods imported from China slowed down during the course of 1992 (23)

This was conceivably due to the fact that the

prices of these imports were mostly set in Hong Kong

dollars and hence should have been dampened somewhat by the

recent sharp depreciation of the Renminbi. There was

therefore a

moderating effect on the rate of inflation in Hong Kong. However, given the declining share of Chinese goods in Hong Kong's retained imports in recent years, this

price stabilisation effect had tended to be less.

(23) Year-on-year rate of increase (%) in:

Retail price index

of goods

imported from China

CPI(A)

All

consumer

All

consumer

goods

Foodstuffs

goods

Foodstuffs

1991

6.0

6.6

12.0

11.4

1992

6.0

6.9

9.

4

8.8

1992 Q1

8.5

10.5

10.1

11.1

Q2

7.5

8.9

9.0

9.5

Q3

4.5

4.9

9.0

7.6

Q4

3.8

3.6

9.4

7.2

Economic Analysis Division

Financial Services Branch

Government Secretariat 28 April 1993

CONFIDENTIAL

機密

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