Guangzhou’s GDP growth slowed in the first quarter, denting the huge southern Chinese city’s hopes that its economy will overtake Hong Kong’s this year.
The city posted economic growth of 4.3 per cent in the first three months of 2018, according to official figures, compared with an expansion of 8.2 per cent in the same period last year.
Guangzhou’s Mayor Wen Guohui previously forecast the city’s GDP would expand 7.5 per cent in 2018. Analysts had suggested that if Guangzhou and neighbouring Shenzhen met their targets the two cities’ economies would both be bigger than that of Hong Kong for the first time by the end of the year, but the latest figures throw this in doubt.
An economist close to the municipal government, who asked not to be named, said: “The latest economic figures come as a surprise to the municipal government. We need to wait and see if there can be an efficient and quick economic recovery later this year.”
The statistics were also a blow to Guangzhou amid fierce competition among cities in the “Greater Bay Area”, which includes Hong Kong and Shenzhen, to attract capital and the most talented workforce, the economist said.
China’s government hopes the development of the bay area around the Pearl River Delta will create a region to rival other economic powerhouses around the world, such as New York, San Francisco and Tokyo bay.
Figures released by the Guangdong provincial government in an economic work report said the value of Guangzhou’s factory output fell slightly to 101.1 billion yuan (US$15.9 billion) in the first quarter.
Retail sales of consumer goods also dipped slightly to 224.19 billion yuan as demand softened.
Meanwhile, the value of exports – once one of the bedrocks of the city’s economy – fell 9.7 per cent to US$19.5 billion in the period.
Li Zhiguang, who runs a clothing factory in Guangzhou, said the dip in the city’s economic performance was expected.
“We’re not surprised because we’ve already felt an obvious decline in sales of clothing, both in e-commerce and offline stores, but the cost of operation and production is soaring.”
Jay Li, who runs a food company in Guangzhou, agreed that higher costs and weaker demand were hitting the city’s economy.
“The catering business isn’t good because consumers seem to lack the will and capacity to extend their spending,” he said. “Those who paid 200 yuan per meal last year will only pay the same amount this year, but our goods and operating costs are growing fast.”
The figures rank Guangzhou’s GDP growth 15th among 21 cities in the province in the first quarter. It posted growth of 7 per cent last year.
The economist close to the authorities said the city government might put together a stimulus package to help revive Guangzhou’s economy, including loosening controls on its property market and postponing curbs on new car registrations to boost sales in the auto sector.