TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 180

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when its growth rate has accelerated to a level significantly higher than in earlier years. One symptom of economic instability is that the rate of inflation experienced in Guangdong has been several percentage points higher than the national average for most of the past three and a half years

11.

(14).

The high rates of inflation experienced in Guangdong recently are related to its over-heated economy with aggregate demand far in excess of aggregate supply. On the supply side, Guangdong's economy has been able to achieve rapid growth in industrial output (paragraph 3), but it has been much less successful in increasing the

(15) supply of a number of key agricultural products Also serious bottlenecks have developed in such critical

(14) Inflation rate (year-on-year) as measured by the

general indexes of retail prices

China

($)

Guangdong (*)

1985

8.8

13.6

1986

6.0

4.8

1987

7.2

11.7

1988 (1st half)

13

20*

Sources

Estimate.

State Statistical Bureau, PRC. Guangdong Yearbook 1987.

(15) During the eight years between 1978 and 1986, the

growth rate in real terms of Guangdong's gross agricultural output was 5.7% per annum. But much of this growth was in cash or commercial crops. More importantly, total cultivated area actually decreased by 7.4% to 44.9 million acres in 1986 from 48.5 million acres in 1978.

G.F. 326

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