TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 43

CONFIDENTIAL # 3

G.F. 326

CRC INF 19/86

(CEC 8/86)

Report on Developments in Hong Kong/China Economic Relations

second quarter of 1986 -

General economic developments in China

The Chinese economy has entered a period of

consolidation after its very rapid growth in 1985. The value of industrial output in the second quarter of 1986,

at Rmb 229.7 billion (at constant 1980 prices), was 5.3% higher in real terms than in the same period last year. For the first half as a whole, industrial output value was

Rmb 428.4 billion, representing 47.8% of the annual plan

and 4.9% higher in real terms than in the same period last

year. In respect of agriculture, following a drop of 7%

in 1985, grain production increased by 3.5% in the first

half of this year to reach 92 million tonnes. Part of

this increase was attributable to an increase in the

acreage of land devoted to grain growing.

2.

Within the industrial sector, the relative shift

in favour of light industries continued. The output value of light industries grew by 5.1% on a year-on-year basis

to reach Rmb 213 billion in the first half of 1986, while

that of heavy industries rose by 4.6% to Rmb 215 billion.

The performance of individual industries varied

considerably. While certain consumer items such as

refrigerators and watches showed strong output growth,

others like automobiles and television sets experienced declines in output. The slowing down of overall economic

growth has helped, to some extent, to relieve the pressure

CONFIDENTIAL #