Guangdong could see 15pc economic growth this year
Guangdong's economy will have no problem sustaining double-digit growth this year provided there is no revaluation of the yuan or further rises in oil prices, experts say.
A provincial government think-tank has predicted that Guangdong's economic growth rate could exceed 10 per cent on the back of a 14.2 per cent expansion last year - an assessment Wang Xi , a Sun Yat-sen University associate professor, agrees with.
'This is within expectations. Guangdong's economy has been growing at a rate of more than 10 per cent since 2000. It is hard to say whether it will be 13, 14 or 15 per cent,' he said.
Guangdong Development Research Centre deputy director Li Huiwu said an 18 to 20 per cent growth in investment was expected because of the implementation of 14 large-scale projects, such as the Guangzhou-Shenzhen Railway.
Total investment in the 14 projects amounted to 163 billion yuan, Mr Li said, adding they would be the main drivers of economic growth because the funds would be injected over the long term.
Guangdong also has several capital and technology-intensive projects such as car and steel plants under way.
Mr Li predicted actual foreign direct investment of US$10 billion last year, which would lead to a growth in exports of about 20 per cent. The dismantling of trade tariffs under the mainland's commitments to the World Trade Organisation will be a boon for Guangdong's export-oriented economy.
Greater integration of the province's economy with Hong Kong and Macau, the implementation of Pan Pearl River Delta co-operation agreements and the China-Asean Free-Trade Area would all make Guangdong an attractive destination again for foreign investors, Mr Li said.
Regarding the possible revaluation of the yuan, Professor Wang said Guangdong's economy was sensitive to exchange rate fluctuations because of its reliance on exports.
'If the [current] rate was maintained or the US dollar continued to depreciate, this would be beneficial to Guangdong,' he said.
Professor Wang said he and other scholars felt that the yuan was undervalued and that an appropriate appreciation was in order, but the central government was facing a dilemma.
'If we continue to maintain the current rate, a lot of hot money will come in. If we allow the yuan to appreciate, hot money will leave,' he said.
'Besides, there are lots of problems involving labour, retrenchments and reforms of state-owned enterprises which have yet to be resolved, so to balance growth and stability the party might sacrifice a few percentage points in economic growth to ensure there is no social upheaval.'
He also said that if oil prices continued to rise, this would have an impact not just on Guangdong but on the whole country.
Although Guangdong was confronted with a shortage of migrant labour and electricity last year, Professor Wang said these were not serious problems.
