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Shenzhen, Dongguan officials warn of difficult times ahead

Officials in Shenzhen and Dongguan have forecast a much slower growth of 10 per cent and warned that their cities are facing their most difficult times in decades.

Shenzhen mayor Xu Zongheng told a Communist Party plenary session yesterday that the city's gross domestic product slid from 14.6 per cent growth to 12.1 per cent last year and was expected to drop further to 10 per cent this year, the lowest level in almost three decades.

At an earlier provincial plenary meeting, Dongguan party chief Liu Zhigeng said the city's economic growth rate had dropped to 14 per cent last year and would go as low as 10 per cent this year.

Economists said both cities would explore possible political and economic reforms to counter the impact of the economic crisis, following assurances from the central government last week that the Pearl River Delta would continue to be an economic test bed.

But many have questioned whether the export-driven cities can swiftly change tack without a practical stimulus.

Shenzhen researcher Gao Haiyan said the new growth targets could be achieved if both city governments invested in infrastructure and encouraged domestic spending.

But he urged the authorities to find a more sustainable way to combat the slump in exports.

Warning of a potential rise in social tensions as the economy faltered, Shenzhen authorities promised in the municipal plenary session that more would be spent on social insurance schemes to help the jobless and to encourage people to spend.

'[We need to] ensure the economic crisis doesn't rattle our social stability ... or interrupt scientific development or industrial upgrades,' Mr Xu said.

He stressed that the government's primary task was to ensure economic growth, describing it as a tough battle, and urged officials to 'make forecasts of the worst scenarios'.

Shenzhen posted average annual GDP growth of more than 27 per cent between 1980 and 2006. Growth last year was cut to 12 per cent, after it became one of the mainland manufacturing hubs worst-hit by the financial crisis.

Dongguan also registered an average annual growth rate of 18 per cent between 2002 and 2007, but it slid to 14 per cent last year.

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