TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 44

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on the energy and industrial raw materials sectors (1).

But in the long term, the fundamental solution is to

remove the supply-side bottlenecks in these key economic

sectors.

3.

As regards the two other bottlenecks,

telecommunications and transport, some recent developments

are noteworthy. In respect of the former, a large scale

application of fibre optics technology is going to take place in the next five years. A 2,000 km fibre optics

network from Nanjing through Wuhan to Chongqing is now

under construction. Regarding the transport sector, China

plans to decentralize control over its 52,000 km railway system, which currently hauls 47% of the country's freight

and carries 25% of the passenger trips. Under the

decentralization scheme, local rail bureaux and

departments will be made responsible for their own profits and losses while the Ministry of Railways retains some

overall control. It is probable that decentralization

will, to some extent, increase the incentive for efficient

operations. The success of the scheme, however, will

depend very much on whether the Ministry of Railways can

effectively coordinate the various rail bureaux to ensure

an efficient nationwide railway system. If not, chaos and disruption are likely to continue.

(1)

Comparing the first half of 1986 with the same period in 1985, the output of pig iron and steel rose by 15% and 10% respectively. The corresponding growth rates for crude oil and coal were 2% and 1%. Electricity production increased by 8% in the first half. However, because of the rapidly growing demand for electricity for domestic consumption and for agricultural use, the supply of electricity for industrial use remained under strain.

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