TNAG-1624-FCO40-2238-Relations-between-Hong-Kong-and-China-1987 — Page 163

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3.

Regarding the production of consumer goods in

the first half of 1987, the output of electrical appliances, including refrigerators, colour TV sets, washing machines and radios, recorded year-on-year

increases ranging from 20% to 90%. Notwithstanding these increases, there is an urgent need to adjust the product

mix to cater for consumer demand. According to recent

estimates released by China's Ministry of Electronics Industry, by the end of March 1987, the number of tape recorders and black-and-white television sets held in

stock reached 5.6 million and 2.6 million respectively.

These stocks were roughly equivalent to 1/2 and 1/4 respectively of the annual production of these items in

1986, and were manifestly excessive.

4.

Retail sales remained buoyant in the first half

of 1987, with an increase of 17.5% in value terms over the

same period last year. This compares with a year-on-year increase of 15% for 1986 as a whole. With the diversion

of goods for export and with a chronic shortage of goods of a high quality in the domestic market, the prices of certain popular commodities, such as textile products, were reported to have risen substantially. The prices of non-staple foodstuffs also showed marked increases.

However, according to the official figures, the average

rate of increase in retail prices in the first half of

1987 was only 6.3%. The Chinese authorities,

nevertheless, acknowledged that in the urban areas, the

rate of inflation was generally much higher. In 29

selected cities, the year-on-year rate of increase in retail prices averaged 9.1% in the first half of 1987. Shenzhen, retail prices rose by 12.2% in the first five months of 1987 over a year ago, while the overall cost of living increased by 11.6%. The Chinese authorities also

admitted that the real income of a small number of

households had probably fallen in the past few months.

In

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