Guangzhou misses its growth target, as trade war and China’s economic slowdown begin to bite
The city of Guangzhou, in China’s manufacturing and exporting heartland, failed to meet its annual growth target for 2018, raising a red flag about the health of the world’s second biggest economy.
China’s fourth largest city by growth domestic product (GDP) grew by 6.5 per cent last year, short of the 7.5 per cent target set at the beginning of the year.
The shortfall was announced in the local government’s annual work report, delivered to the local parliamentary session on Tuesday by the city’s mayor, Wen Guohui.
Wen blamed Guangzhou’s weaker-than-expected economic performance on sluggish exports and private sector investment.
The city’s foreign trade, covering both exports and imports, grew by just 1.2 per cent in 2018, year-on-year.
Guangzhou has lowered its 2019 growth target to a range of 6 to 6.5 per cent to reflect this.
The news is fresh evidence of a worsening slowdown in China, as it continues to fight a trade war with the United States.
Of the other 19 provinces and municipalities to have released their growth targets for 2019 as of today, 12 have lowered their goals, with six remaining unchanged.
Only Shanxi, the coal-rich northern province, has set a higher growth target for this year than last year.
Tianjin, also in northern China, set its GDP growth target at five per cent in 2018, in stark contrast to last year’s target of eight per cent.
Wen aimed to keep Guangzhou’s unemployment rate below 3.5 per cent for 2019, the same target as last year. This is despite the fact that the official jobless rate was just 1.9 per cent in 2018.
Peng Peng, vice-president of Guangdong’s South Non-governmental Think Tank, said Guangzhou may start to experience an unemployment problem this year.
“There is a growing public consensus that entrepreneurs will suffer a cold winter [in 2019],” Peng said.
“The direct and practical measures that would help enterprises are cuts in taxes and administrative charges. But these would result in shrinking government revenues or worsening deficits. It’s becoming a bigger and bigger dilemma for local governments in the current economic situation,” Chen said.
Nationwide, the Chinese government has made “stabilising” growth its top priority for 2019, with job creation especially for young graduates seen as a necessity to ensure social stability.
Chen Chao, a deputy delegate of the Shenzhen Chinese People’s Political Consultative Conference, a local political advisory group, said the government should slash social security payments to help employers.
He said that many privately-owned factories in Guangdong are cutting full-time jobs and hiring workers on “on temporary contracts” instead.
Source: South China Morning Post