CONFIDENTIAL # 3
China
Summary of major developments in Hong Kong
Economic Relations in the first quarter of 1987
(Paragraph references follow
those in the report)
(1)
Continuing the trend which began in the second half
of 1986, China experienced rapid economic growth in
the first quarter of 1987. Comparing on a year-on-year basis, the value of industrial output grew by 14.1% in the first quarter. The respective
growth rates of light and heavy industries in the first quarter were 14.9% and 13.3%. The worry about
the economy over-expanding and over-heating
re-emerged (paragraph 1). The official year-on-year
inflation rate of 5% in the first quarter of 1987 is
believed to be an under-estimate (paragraph 5).
(2) Excessive capital investment in unproductive
projects is still a serious problem in the Chinese
economy (paragraph 7). In an attempt to limit the
availability of funds for investment in non-key
areas, the Chinese authorities have imposed tighter
controls over the issue of bonds and stocks by
enterprises (paragraph 8).
(3) The Chinese government incurred a deficit of Rmb
7.08 billion in 1986, largely due to the fall in
profits of state enterprises and increase in
subsidies to offset price increases and to
compensate for the losses suffered by state
enterprises. In the 1987 Budget, a deficit of Rmb
8.02 billion is planned (paragraph 9).
G.F. 326
CONFIDENTIAL 機密
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