GF 323
CONFIDENTIAL
機密
CRC INF 12/93 (CEC 7/93)
Report on Developments in
-
China's Economy and Hong Kong China Economic Relations
Second Quarter of 1993
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(I) General economic developments in China
(a) Overall view
indications
of
China's economy showed clear overheating in the second quarter of 1993. The real growth
rate of gross domestic product (GDP), at about 14% in the first half of the year, continued to exceed the official annual growth target of 8 - 9% as stated in the Eighth Five
Year Plan (1991-95). Growth in the second quarter was
primarily investment-driven, as in the preceding few quarters. A loose monetary and credit position, in a
financial sector which was still very much underdeveloped
and liable to abuse, had been accommodating the investment
boom. Concurrently, the national inflation rate, as well
as inflation in the major cities, surged to their highest levels since 1989. Coupled with a worsening of the visible
trade balance, this resulted in a sharp depreciation of the
Renminbi to a historic low of nearly Rmb 11 per US$ in
mid-June. These adverse developments prompted the Chinese
government to announce a series of restraint measures on 3
July.
Details of the "16-point plan" are given in
Annex 1. Over the past two months, these measures seem to
be bearing some initial results.
The Renminbi has
rebounded to around Rmb 8.7-8.8 per US$, the growth rate of
residents' deposits has re-accelerated, bank
outstanding
subsided.
loans
have fallen back, and property speculation has
A fuller assessment of the effectiveness of
these restraint measures, as well as their implications for both China's and Hong Kong's economies, can only be made several months later, when the key economic statistics for
the latter part of the year become available.
CONFIDENTIAL
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