TNAG-1370-FCO40-1816-Relations-between-Hong-Kong-and-China-1985 — Page 48

CONFIDENTIAL #3

Report on Developments in Hong Kong/China Economic Relations first half of 1985

General economic developments in China

Continuing the trend established in 1984 when

the gross value of industrial and agricultural output grew

by 14.2% in real terms, the economy of China grew rapidly

in the first half of 1985. According to the State

Statistical Bureau of China, total industrial output value

in the first six months was Rmb408.6 billion, which

represented 53.8% of the annual plan and was 23.1% more than in the same period last year. In respect of agriculture, the output of cash crops increased at the expense of grain crops. While the output of summer grain,

at 87.5 million tons, was slightly less than last year's

figure because of a reduction in acreage, the output of summer rapeseed is expected to reach 5.35 million tons

this year, an increase of 31.6% over last year.

2.

Though they still lag substantially behind the overall performance of the economy generally, China has made significant progress in two important bottle-neck areasy energy and transportation. Energy output in the first half of 1985 was equivalent to 409 million tons of

standard coal, representing an increase of 11.3% over the same period in 1984, the highest rate of increase in recent years. Notwithstanding some recent improvement, the supply of energy in general and of electricity in particular still constitutes an important bottleneck to industrial and other economic developments. Power cuts

and rotational supply are still very common in many places

in China. As regards transportation, the output of motor

vehicles, internal combustion engines and small tractors went up by 50% compared with the first half of 1984. Passenger and freight volumes also reached record levels

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