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Guangdong facing tough times

By Li Wenfang (China Daily)
Updated: 2008-11-28 10:07

Guangdong province recorded markedly slower growth in its major economic indices in the first 10 months of this year and could face new challenges in the next two years.

Li Miaojuan, director of the Guangdong development and reform commission, said this in a mid-term assessment of the 11th Five-Year Program (2006-10) to the standing committee of the provincial people's congress on Tuesday.

Growth in gross domestic product (GDP), exports and government revenues of Guangdong were 10.3, 13 and 17.2 percent respectively in the first 10 months, 4.4, 10.8 and 33.4 percentage points lower year-on-year, Li said.

Guangdong contributed 12 percent of the national GDP last year.

Due to costly raw materials, the strong yuan, and the global financial crisis, growth in industrial added-value was 5.3 percentage points lower year-on-year during the period, the provincial statistics bureau said.

Guangdong saw a decline in new companies registering in the first 10 months, the provincial industry and commerce administration said. New registrations of foreign-funded firms fell by 24 percent, while that by privately-held and self-employed ones, rose only slightly.

According to the five-year program, Guangdong will achieve 9 percent average annual growth in GDP in the five years. The province generated 14.6 percent average growth in the past two years.

"For the rest of the 11th Five-Year Program, Guangdong will face a harsh economic development environment, with markedly increasing uncertainties and unstable factors," Li said.

Guangdong governor Huang Huahua said earlier this month that the government will boost investment to stimulate the economy.

The government will put in about 100 billion yuan ($14.6 billion), which is expected to encourage investments of 500 billion to 1,000 billion yuan by other parties.

Key projects in Guangdong will receive 300 billion yuan next year, or twice the sum this year. Investments by all parties are expected to top 1,300 billion yuan next year.

Li outlined the major problems in the economy in the past two years.

Annual hi-tech industrial output growth was slower than the national average. Research and development (R&D) spending by companies remained low, with the ratio of R&D spending to GDP even lower than the national average.

Growth in the service industry was not strong enough, making it a difficult task for the sector to contribute 45 percent of GDP by 2010.

The provincial government will allocate 2 billion yuan in the next four years to encourage suitable companies in the Pearl River Delta region to relocate to the less developed areas, and 2.8 billion yuan for training workers in the less developed areas, Li said.