CONFIDENTIAL # 3
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2
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2.
Within the industrial sector, the rates of increase in output in the fourth quarter of 1986 were roughly the same for both the light and the heavy
industries.
Their respective year-on-year growth rates in
real terms were 16.4% and 15.3%. For 1986 as a whole, the value of output of the light and the heavy industries
amounted to Rmb 532.4 billion and Rmb 583.3 billion
respectively, higher by 12.7% and 9.6% in real terms than in 1985. The performance of individual industries
varied. The output of industrial raw materials like pig iron and steel grew rapidly in 1986
(2)
consumer items such as refrigerators, cameras and watches continued to show substantial growth in output.
Certain
Production of textile-related products, such as yarn, fabrics and woollen piece goods also recorded considerable growth. On the other hand, some consumer items like automobiles, television sets and radios, and certain types of machinery and equipment including computers and tractors experienced declines in output.
3.
It is not easy to explain the sudden upsurge in industrial activity in the fourth quarter of 1986. partial explanation may be the expansion in China's money supply, as reflected by the 18% growth in the total volume
of Renminbi notes in circulation during the twelve months ending September 1986. If the recent growth momentum of China's industrial sector carries through to 1987, the Chinese economy may again become overheated, with
(2)
Comparing 1986 with 1985, the output of pig iron and of steel rose by 15% and 12% respectively.
CONFIDENTIAL &
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