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CONFIDENTIAL

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機密

the

year-on-year rate of increase in the index was 6.8% in

fourth quarter, while in the first three quarters the increase averaged at slightly below 5%.

the

4.

An even sharper acceleration in the inflation

rate was observed, when measured in terms of the Cost of Living Index for the major cities (2). In 1992 the index rose by 10.9%, in contrast to the increases of only 1.3% in

1990 and 5.1% in 1991. Nevertheless, whether in terms of

the retail price index or the cost of living index, the

current inflation rate in China is still some way below those prevailing in the late 1980s (3).

5.

While the upsurge in inflation has clearly caught

the attention of Chinese leaders, the general view is

manifestly that

continue with its

economic development

market-oriented

China

should

reforms

and

programmes, and that if any anti-inflation measures are to

(2) The Cost of Living Index measures the price movements of all goods and services consumed by the workers and their families in 35 major cities of China. It is roughly comparable to the Consumer Price Index in Hong Kong.

(3)

Year-on-year rate of increase

General Retail Price Index

(*)

Cost of Living Index for 35 major cities (*)

1986

6.0

7.0

1987

7.3

8.8

1988

18.5

20.7

1989

17.8

16.3

1990

2.1

1.3

1991

2.9

5.1

1992

5.4

10.9

1992 Q1

aaaa

5.0

11.0

Q2

4.8

10.2

Q3

4.8

10.5

Q4

6.8

13.2

1993 Q1

8.6

15.7

CONFIDENTIAL #

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