INDUSTRIAL production dropped 0.8 per cent in real terms last year as manufacturers moved to China. Figures showed little change in the fourth quarter of last year compared with the preceding quarter and the same quarter in 1992, according to the Census and Statistics Department. Daryl Ho, an economist at Jardine Fleming Broking, said: ''The figures indicate that overall industrial growth was virtually flat. ''While other data have shown domestic exports have decreased in real terms, the latest statistics suggest that production catered mostly for the domestic market. ''This in turn underlines the transformation in domestic industry, with the shifting of labour-intensive, export-oriented industry to Guangdong province.'' Last year, production of chemicals, rubber, plastic and non-metallic mineral products plunged 9.9 per cent, while that of basic metals and fabricated metal products dropped 9.4 per cent. Textile industry output dropped 7.2 per cent. ''The textile industry fell by a smaller percentage because the quota restrictions imposed by the Multi-Fibre Agreement discouraged Hong Kong textile factories from moving into China,'' said Myles Huang, economic research officer of the Bank of East Asia. However, output of the apparel industry was up 1.8 per cent. Production of paper products and the printing industry surged 12.8 per cent, while electrical and electronic products, machinery, professional equipment and optical goods posted a rise of 2.6 per cent. Output of food, beverages and tobacco industries also grew 2.6 per cent. Industrial production in real terms measures the volume of domestic production after discounting the effect of price changes.