TNAG-1457-FCO40-1981-Relations-between-Hong-Kong-and-China-1986 — Page 8

CONFIDENTIAL # 3

Report on Developments in

Hong Kong/China Economic Relations

G

first quarter of 1986

General economic developments in China

its economy.

The pace of economic growth in China continued to slow down in the first quarter of 1986, reflecting the deliberate attempt by the Chinese government to cool down

The value of industrial output in the first quarter of 1986, at Rmb 198.7 billion, was 4.4% higher in money terms than in the same period last year. While this growth rate is modest when set against the year-on-year growth rates of 10% in the fourth quarter of 1985 and of

18% for the whole of 1985, it should be noted that the first quarter of 1985 was a period of exceptionally buoyant activity.

2.

Within the industrial sector, the relative shift

in favour of light industries continued. The output value of light industries grew by 4.7% on a year-on-year basis to reach Rmb 100.5 billion in the first quarter of 1986, while that of heavy industries rose by 4% to Rmb 98.1 billion. The growth pattern of individual industries,

however, varied. Some consumer durables like

refrigerators, colour TV sets and washing machines continued to register substantial increases in output, albeit at slower rates than in the past few quarters. success in slowing down the overheated economy has helped to ease, to some extent, the pressure on the demand for

energy and industrial raw materials. However, as these two sectors have been chronically weak, further increases in their output will be needed to sustain future economic growth. The first quarter statistics show that energy production grew moderately over the same period in 1985,

The

CONFIDENTIAL ##

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