G.F. 326
CONFIDENTIAL # 3
11.
- 7
Rapid increases in incomes and investment would not have been possible if there had been a tight control over the money supply. But so far China's monetary policy, to the extent there is one, has been accommodating. The money supply, as indicated by the amount of currency in circulation, the amount of domestic deposits and the amount of bank loans, registered very high increases during the period 1983 and 1987 important factor behind this upsurge was that a significant proportion of China's fiscal deficits in
(9) recent years have been monetarised, i.e. financed by
(8)
•
One
(8)
(9)
Indicators of China's money supply :
As at end of
Currency in
circulation
(Rmb bn)
Domestic
deposits
Banks loans
(Rmb bn)
(Rmb bn)
1983
53.0
276.2
343.1
1984
79.2
338.6
442.0
1985
98.8
427.3
536.6
1986
121.8
538.2
759.0
1987
145.4
657.2
903.2
Average
annual
growth
rate (%)
28.7
24.2
27.4
1983-1987
(4 years)
Source: State Statistical Bureau, PRC.
China's fiscal position :
Revenue
(Rmb bn)
Expenditure
Balance
(Rmb bn)
(Rmb bn)
1983
124.9
129.3
-4.4
1984
150.2
154.6
-4.4
1985
186.6
184.5
+2.1
1986
226.0
233.1
-7.1
1987
234.7
242.7
-8.0
1988
255.5
263.5
-8.0
Source : State Statistical Bureau, PRC.
CONFIDENTIAL #
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