TNAG-1239-FCO40-1552-Future-of-Hong-Kong-1983 — Page 68

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CONFIDENTIAL

economic situation or because of their inability to make proper

use of allocations for the far harder task of technical

transformation. Non-productive capital construction accounted

for 45.5% of the total in 1982. Local banks have also been

given more freedom of decision and total loans have risen

rapidly. Too often this has resulted in duplicative production

and an appalling waste of manpower and materials.

some key State capital construction projects have been lagging

behind schedule.

Meanwhile

11. Yao stated that there had been too much decentralisation

and that dissipation of China's limited resources could not

continue in this way. There will now be tighter centralised

control over capital construction. Financial revenue as a

proportion of national income, which fell from 37.2% in 1978

to 25.5% in 1982, is to be raised again. Bank loans will be

strictly controlled and major cities are to have greater powers

over enterprises for purposes of planning and coordination.

While capital construction in general will be curbed, investment

in key projects will increase. Energy and transport are to

receive 39.4% of total investment in 1983, compared with 28.6%

in 1982. Top priority will also be given to light industry,

whose growth rate of 4.7% in January to May over the equivalent

period of 1982 is only just adequate.

12. Another problem which is to receive continued emphasis will

be enterprise reorganisation. Renewing the leaderships of

CONFIDENTIAL

/industrial