TNAG-2126-FCO40-3036-Investment-in-Hong-Kong-1990 — Page 57

CONFIDENTIAL # B

Table 1

3.

(a) Capital expenditure on plant and

machinery

According to the quarterly GDP estimates, overall expenditure on plant and machinery declined by about 12% in the fourth quarter of 1989, having declined by 5% in the third quarter of 1989. This

represents a severe setback from the corresponding increases of 17% in the first quarter and 11% in the second quarter. For 1989 as a whole, the increase

was only 28, down from 15% in 1988 (Table 1).

4.

Expenditure on plant and machinery was predominantly made by the private sector. Its share

amounted to about 97% in 1989, the same as in 1988. Private sector expenditure on plant and machinery fell by about 16% in the fourth quarter, following increases of 17% and 11% respectively in the first and second quarters and a decrease of 53 in the third

quarter. The increase for 1989 as a whole was only

The corresponding increase for 1988 was 14%.

The severe setback in investment in plant and machinery was due in part to the slow-down in economic activity in the second half of 1989, and in part to the adverse effect on investment sentiment

brought about by the June events in China.

18.

5.

Because of its relatively small size, public sector expenditure on plant and machinery has

been subject to wide fluctuations. Having increased

by 47% in 1988 and 22% in the first quarter of 1989, it fell by 27% in the second quarter, and further by 37% in the third quarter. In the fourth quarter it rose by 1138, mainly due to the acquisition of

rolling stocks by the Kowloon-Canton Railway

Corporation.

D

CONFIDENTIAL #