Guangdong province reported an 8 percent growth in its gross domestic product last year, and local residents’ income increased by 8.5 percent from the year before.
The province’s fixed-assets investment grew by 15.8 percent, though its overall trade dropped by 3.9 percent.
Its exports expanded 0.8 percent, beating the nation’s average growth rate. Foreign investment also edged up 0.01 percent.
The province’s tertiary industry contributed more than half of the GDP for the first time last year.
Guangdong has managed to post stable growth despite the nation’s economic slowdown.
Its share of the nation’s total exports rose by 0.9 percentage points. Its GDP growth exceeded the nation’s average by 1.1 percentage points.
The size of Guangdong’s economy hit over 7 trillion yuan (US$1.08 trillion) last year, contributing more than 10 percent of the nation’s economic growth.
However, the province still faces huge pressure in combating slower growth.
Last year, its GDP reached 7.28 trillion yuan. The service sector generated 57.1 percent of the GDP growth, while the primary and secondary industries represent 1.7 percent and 41.2 percent respectively.
It’s clear that the province has managed to optimize its economic structure over the years.
Guangdong has forged an industry mix led by emerging new industries, advanced manufacturing and modern services.
Its advanced manufacturing sector posted a 10 percent growth in added-value to 1.47 trillion yuan, while modern services grew 11.9 percent to 2.23 trillion yuan.
However, high-tech manufacturing only accounts for 11.2 percent of its total industry mix, while traditional industries continue to represent nearly 40 percent.
Guangdong will gradually lose its competitive edge in the low-end market amid rising labor and land costs.
In fact, its industrial growth rate has been declining since 2010, and slowed to 6.8 percent last year from 14.6 percent in 2010.
The profit growth also dropped to 8.2 percent last year from 23 percent three years ago.
More than 6,200 companies in the province reported a combined loss of 50.8 billion yuan last year, up 17.7 percent from the previous year. As many as 548 companies have posted losses for three straight years.
Guangdong has been implementing an innovation-led growth strategy in recent years. In this regard, the government has unveiled various guidelines and plans to accelerate industry upgrades, develop smart manufacturing and expand the use of robots.
Last year, the province’s R&D spending accounted for 2.5 percent of its GDP, up 0.8 percentage points from 2010.
It boasts two innovation demonstration zones in the Pearl River Delta and Shenzhen, and 11 state-level new and high-tech industrial parks.
As Guangdong has encountered the “new norm” in its economic growth earlier than other regions, structural reform is necessary.
The province has released an overall plan for supply-side reform and five action plans. It intends to implement a three-year structural reform.
Meanwhile, the Pearl River Delta region is poised to play a bigger role in the nation’s economic restructuring. The PRD region generated 79.2 percent of the province’s total GDP last year.
It continued 9.1 percent of the nation’s GDP with less than 0.5 percent of the country’s land area.
Guangzhou and Shenzhen, the two big cities in the region, should join Hong Kong in a world-class city cluster in the PRD region with global standard investment and trading rules to plug into the global economic network.
This article appeared in the Hong Kong Economic Journal on Mar. 14.
Translation by Julie Zhu
[Chinese version 中文版]
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