Guangdong, the mainland's principal foreign trade province, is poised to become a national leader in the growth of the information-technology (IT) sector, according to its governor Lu Ruihua. 'The promotion and expansion of the information-technology industry in Guangdong will be a new and major breakthrough for our economy,' he said. The governor was speaking yesterday during a wide-ranging interview on the final day of Guangdong's landmark International Consultative Conference. The meetings brought together provincial officials and 20 international industrialists, academics and scientists for a weekend of discussions on the future development of the province's economy. 'Guangdong has the conditions and necessity to accelerate its growth of information-technology industries and become the most developed region in China for the export of IT products and services,' Mr Lu said. The governor also worked to dispel notions Guangdong was crippled by the collapse of the province's leading window company Guangdong International Trust and Investment Corp (Gitic), which was declared bankrupt in January with debts of 38.77 billion yuan (about HK$36.19 billion). 'There is a misunderstanding about this thing,' he said. 'It is a normal phenomenon in capitalist countries . . . for poorly performing enterprises to go bankrupt and close down, even for large financial institutions. 'But that does not seem natural in China. This kind of bankruptcy appears to be a great deal, a terrible thing, as if the heavens are falling.' Mr Lu was also critical of some media reports which, he said, speculated on the causes of the bankruptcy. 'Some newspaper reports turned this business matter into a political question,' he said. The governor characterised other reports, particularly those discussing tensions between the central government and provincial leadership, as fabricated. He singled out some Hong Kong reports as being particularly irresponsible. Mr Lu said the decision to bankrupt Gitic, as well as restructure the province's leading investment conglomerate, Guangdong Enterprises, was made on the provincial level with central government approval. He attributed Gitic's failure to the difficult transformation of the mainland's economy and restructuring of the country's state-owned sector. 'We lacked [adequate] experience and business management,' he said. 'There was poor management at those companies, including some irresponsible senior executives, even corruption.' Mr Lu said dealing with most state-owned enterprises was tantamount to dealing with a mayor or provincial governor, all of whom were predisposed towards protecting local industry. 'This kind of difficulty has led to more than 40 per cent of state-owned enterprises being loss-making and this must be changed,' he said. The governor said there were lessons to be drawn from Gitic's failure. 'Business and investment institutions should really operate within the market rules of the game and the government should not and will not guarantee their performance,' he said. 'I think it is unfair to require the government to provide its credibility to commercial loans, to act as a kind of guarantor for business. 'Imagine a situation where local governments borrow money and expect the provincial government to guarantee repayment . . . We will never do that.' Mr Lu admitted Gitic's collapse had created some hardship for Guangdong enterprises seeking to borrow funds on international markets. 'But I think that's a good thing. In fact we really do not need some of those so-called loans,' he said. On the subject of the mainland's ongoing World Trade Organisation entry negotiations, Mr Lu said if the terms of accession were good for the country, they would be good for Guangdong. 'I believe China needs accession to the WTO and the world also needs China's participation,' he said. On co-operation between Guangdong and Hong Kong, Mr Lu indicated he would seek to work further with the SAR to create synergies and mutual advantages, particularly in the development of IT industries. 'Guangdong and Hong Kong are not competitors, but two brothers,' he said.