Key indicator shows economy's instability

STATISTICS released by the Government yesterday showed that the country's economy remained critical and unstable despite efforts by the authorities to keep prices down to a healthy level.

According to figures released by the State Statistical Bureau (SSB), the national consumer price index - China's key indicator of inflation - soared 21.7 per cent in April over 1993.

While the SSB claimed that the increase was seven percentage points lower than that in March, the bureau admitted that much of the slowdown was achieved in big cities and inflation remained dangerously high in most rural villages and small cities.

The bureau also conceded that although industrial production by state-owned factories and mines showed a minor five per cent increase in April, ''overall efficiency'' of the state-owned sector remained ''poor''.

Prices of commodities such as food, clothing and services registered the highest increases in April but prices of vegetable had shown sign of improvement due to seasonal changes, the SSB said.

Another healthy sign was shown in an increase of saving deposits in banks, the SSB said. In April, Chinese banks reported a 15.9 billion yuan (HK$13.5 billion) increase in saving deposits.

On the other hand, the bureau also reported a 15.2 billion yuan increase in deposits by businesses in April over the same period last year.

The figure, however, contradicted an earlier report which said the majority of state-owned enterprises had difficulty in financing their production due to the anti-inflation policy imposed by the Government.

The bureau claimed that the increases in bank deposits were significant because they were on top of a ''huge subscription'' of state treasury bonds by the public in the past month.