TNAG-1623-FCO40-2237-Relations-between-Hong-Kong-and-China-1987 — Page 192

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telephones and computer parts. CAD/CAM technology will be employed and the total investment is expected to be about HK$13.2 million.

44.

Outside the manufacturing sector, two other developments involving CITIC are noteworthy. Firstly, in January, the Corporation reached an agreement with Swire Pacific and the Hongkong and Shanghai Banking Corporation to acquire 12.5% of the shares of Cathay Pacific Airways. This acquisition will cost CITIC HK$1.94 billion. Secondly, it has been reported that, with the rapid expansion and diversification of CITIC's business in recent years, there are plans to re-structure its Hong Kong branch into a holding company registered in Hong

Kong.

The holding company, when created, is expected to enjoy greater autonomy in business decisions.

Summary and conclusions

45.

In 1986, China had a growth rate of industrial output of 11.1% in real terms. This represented a substantial slow-down compared with the growth rate of 18% in 1985. This figure of 11.1% for the year as a whole conceals, however, a significant acceleration in the growth rate during the course of 1986, from 4.4% in the first quarter to 5.3% in the second quarter, 8.8% in the

The third quarter, and 15.9% in the fourth quarter. growth momentum is expected to continue into the first half of 1987, although the year-on-year growth rate for this period is likely to be pushed up partly by the relatively low base of comparison in the first half of 1986. These high growth rates may, once again, alert the Chinese authorities to the possibility of overheating, leading to the imposition of further measures to cool down

the economy.

While China will remain as an essentially

centrally planned economy, it can still undergo significant fluctuations in its economic growth.

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