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are signs that the rate of inflation will accelerate
further in the months to come. The money supply grew
(6) rapidly in 1986 (paragraph 3) and so did wages the supply side, the diversion of goods for export has had
some unfavourable effects on the domestic supply situation. In theory, the adverse effects of inflation on consumers could be offset by increases in nominal income.
However, because the fruits of economic growth are
unlikely to be shared evenly, some people are likely to be hit harder by price increases than others.
13.
Commentaries in newspapers in China have
recently called for efforts to limit consumer spending.
The value of retail sales, at Rmb 495 billion in 1986, was
15% higher in real terms than in 1985. Although already
much lower than the rate of 28% recorded in 1985, it is
still excessive in relation to the growth rate of national
income (paragraph 1). The suggestion that production should be guided more by expected consumer demand than by state planning has also been attacked by some critics in
the newspapers.
14.
In respect of capital investment, the national
total for 1986 was estimated at Rmb 296.7 billion, 16.7%
higher in money terms than in 1985. Of this total, 65% was undertaken by state-owned enterprises. It is likely that more emphasis will be placed on restricting projects outside the state plan, in a move to control excessive
(6)
Comparing the first nine months of 1986 with the same period in 1985, the total wage bill increased by 20.4%.
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