CONFIDENTIAL #
CRC INF 1/89
(CEC 9/88)
Report on Developments in Hong Kong-China Economic Relations
- third quarter of 1988 -
(I) General economic developments in China
(a) Overall view
China's economy remained buoyant in the third quarter of 1988. But, notwithstanding a substantial increase in aggregate supply, the high and accelerating rate of inflation suggests that a significant proportion of aggregate demand remained unsatisfied. One outcome was a faster growth of imports in the third quarter than in the first half of 1988. The high rate of inflation also seems to have caused a shifting of resources to the domestic sector from the external sector, resulting in a slower growth in exports.
2.
(b) Domestic sector
At 18% in real terms, the growth rate of gross industrial output in the third quarter was slightly faster than in the first and second, which was already very high
GF 323
CONFIDENTIAL
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