CONFIDENTIAL # 3
1985
(2)
3 -
it was only in the first half of this year that
it appeared to be getting out of control.
Nothwithstanding the usual doubts expressed about the reliability of the official inflation rate, its movements in recent years are at least indicative of the underlying trend. Also, taking the June figure as an example, it is unlikely that the year-on-year rate of increase, officially put at 19%, represented any significant under-statement of the true extent of inflation.
5.
With China's population growing at slightly over 1% per annum in the 1980s and given the rapid economic growth during this period, there is every reason to believe that the standard of living of an average Chinese has been improving substantially. It is officially
recognized that about 20% of the people in China experienced no improvement or even a deterioration in
their living standards during 1987 as a result of the rate of inflation exceeding the growth rate of their
(2)
1984
1985
1986
1987
1988 (1st half)
China's inflation rate (year-on-year) as measured by the general indexes
of retail prices.
(8)
2.
.8
8.8
6.0
7.2
13
Source: State Statistical Bureau, PRC.
G.F. 326
CONFIDENTIAL #≈
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