GDP growth declines in China's Guangdong province

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Sunday, 25 January 2009

Guangdong province, China's biggest manufacturing base, has reported a sharp drop in economic growth in 2008 as global financial woes hammered the region -- often called the "world's factory floor." The gross domestic product for Guangdong grew by 10.1 percent last year -- a decline of 4.6 percentage points compared to 2007, the provincial Statistics Bureau said on its Web site Friday. However, the 2008 figure was higher than the government's forecast of 9 percent.
Guangdong, which shares a border with Hong Kong, has long been China's most important base for exporters producing everything from toys and shoes to computer parts and mobile phones. But many of the factories have been struggling amid rising production costs and the global economic crisis that is sapping overseas demand for their goods.
About 62,400 businesses shut down in Guangdong last year, 4,739 more than in 2007, a deputy provincial governor, Huang Longyun, told reporters in Beijing earlier this month. But Huang added that most of the shuttered firms were small companies, and the province added a net 38,200 new enterprises in 2008, according to a transcript of his remarks.
The global financial crisis began hitting Guangdong as officials were trying to carry out a new blueprint for the most industrialized part of the province, known as the Pearl River Delta. The plan calls for encouraging companies to shift to high-value manufacturing and heavy industry.
Labor-intensive factories producing low-end goods were being encouraged to move to interior provinces to make room for the more advanced industries. Those who have resisted moving have not received government assistance and have been battered by the economic downturn.
Among the hardest hit have been toy makers. Last year, 922 toy exporters -- nearly one-third of the toy factories operating in 2007 -- closed down in Guangdong, the official Xinhua News Agency reported this month, citing customs figures. China is the world's largest exporter of toys and Guangdong factories produce 70 percent of the goods, the report said.

Source: Associated Press