G.F. 326
CONFIDENTIAL #≈
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20.
In another development, there are plans to provide greater flexibility to coastal provinces, municipalities and autonomous regions in their handling of short term external borrowings (below 1 year). Under the proposed system, such borrowings need not be approved on an individual basis as at present so long as the combined amount does not exceed the quota limit.
21.
(a) Developments in the vicinity of Hong Kong
Guangdong was the fastest growing province in terms of gross industrial output in the first half of 1988. Estimated at about Rmb 40 billion, Guangdong's gross industrial output was 31.1% higher in real terms than in the first half of 1987 and was about 7% of the
national total. The industrial growth rate for the Pearl River Delta region is believed to have been even higher than the provincial average. Exports amounted to US$3.5 billion in the first half of 1988, 34.2% higher than in the first half of 1987. Besides growth in industrial output and exports, the value of retail sales, estimated at Rmb 25.1 billion, also recorded an increase of 38% in
the first half of 1988.
22.
But the problem of over-heating has also become more serious. On the supply side, there were serious shortages of key industrial raw materials including rolled steel, metal products, chemicals and construction materials. It was reported that the prices of steel reinforcing bars for construction had increased by as much as 30% during the month of July. As Guangdong's industries are mainly concentrated in processing, it has to rely on other provinces and imports for about 70% of its supply of industrial raw materials. With the development of provincial protectionism, some provinces are reluctant to supply industrial raw materials to
CONFIDENTIAL #3
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