Nov. 10 – The governor of Guangdong province, Huang Huahua, has stated that the value of exports leaving for overseas markets has dropped by 10.9 percent this year, with GDP slowing from 14.5 percent in 2007 to 10.2 percent for 2008.
The figures are important as Guangdong is both China’s wealthiest province, with two of its cities, Guangzhou and Shenzhen enjoying a higher per capita income than Shanghai. Guangdong also accounts for 28 percent by value of China’s entire exports.
Commenting that Guangdong was facing severe trading pressures, he acknowledged that increasing numbers of local and foreign invested enterprises were posting losses. Hong Kong business associations, including the Hong Kong General Chamber of Commerce, have been estimating that up to 3,000 Hong Kong-owned firms in the Pearl River Delta have closed in the past 12 months, and that thousands more could shut down over the coming months.
That perspective has also been echoed in Shanghai, with Party Secretary Yu Zhengsheng stating last week that industrial and fiscal tax revenues were at an all-time low, and that GDP growth had been 10.1 percent during the first nine months of the year. Beijing, with its dynamic Bohai Rim, is also struggling to meet targeted double digit growth this year as exports from Tianjin retrench. Economists are expecting matters to get worse: “These regions are vulnerable to changes because xports constitute the biggest proportion of their economy,” said Zhang Ming, an economist with the Hong Kong University.
As a rescue package has been announced by Beijing, Huang Huahua said that the Guangdong would immediately increase investment is fixed assets, infrastructure development in an effort to stimulate demand. The provincial government has earmarked RMB2.3 trillion in spending over the next five years on 222 projects, with a further RMB5 billion being used to support high-tech businesses as the province seeks to move away from exposure to low cost manufacturing, much of which is moving to nearby Vietnam.