TNAG-2292-FCO40-3304-Official-visits-from-Hong-Kong-to-China-1991 — Page 7

CONFIDENTIAL #2

GF 323

CRC INF 12/91

(CEC 11/91)

Summary of Major Developments in Hong Kong-China Economic Relations in the Second Quarter of 1991

(1)

China's

of

1991.

economy remained buoyant in the second quarter In the first half of 1991, China's gross

national product was estimated at Rmb 820.7 billion

and gross industrial output at Rmb 1,126 billion,

representing increases of 6.1% and 13.4% respectively

in real terms over the same period in 1990. Such

rapid growth rates could be attributed to a

monetary

the

loose

stance

and

continuously

government's support to. the loss-making state-owned

enterprises (paragraph 2).

(2) Partly because of the inefficiency of the state-owned

enterprises, the growth rates of output from the

bottleneck sectors like energy and certain key raw materials were again lagging significantly behind overall industrial growth. This shortfall was further exacerbated by the recent flooding in China (paragraph

(3)

(4)

5).

Both investment and consumption expenditure showed

significant growth in the first half of the year (paragraphs 7 and 8).

raw

Although the state-fixed selling prices for some key materials and basic necessities were raised in the

half of 1991, the overall rate of inflation

remained low at

first

1.8%.

The

government

was

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