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(4)
(5)
of China is still targetting a growth rate of around
20% for bank loans in this year, which is somewhat
higher than the forecast growth rate of China's
nominal GNP, its overall monetary and credit stance
is probably still not very restrictive. This may
suggest that, provided it is not getting out of
control, a higher inflation rate is considered to be
not an unacceptable price to pay for China's on-going
economic growth and reforms. But in the light of the
latest inflation trend, stronger restraint measures
aimed at curtailing the less justifiable investment
projects are now more likely (paragraphs 14 to 23).
In the latter part of 1992 and the early months of
1993, the exchange value of the Renminbi experienced
a sharp depreciation in both the foreign exchange
adjustment centres and the black market. Although
the depreciation could have been partly a consequence
of
the rising inflation, this could in turn add to
the inflationary pressures in China, because of the
resultant higher import prices of both consumer goods and industrial goods (paragraphs 25 and 26).
infl
In the present circumstances, China's inflation will
probably not have too much of an impact on the Hong
Kong economy. This is because the prices of China's imports into Hong Kong, which are mostly denominated
in
the
Hong Kong dollars, will probably change little as higher prices and costs in China are being offset
by
the depreciation of the Renminbi. Moreover, the overall influence of the prices of Chinese goods has
also been progressively reduced, following the
continued decline of China's share in Hong Kong's retained imports over the years (paragraph 27).
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