Province sees lower growth of 10.7pc

Guangdong takes double hit from US slowdown, yuan rise

Mainland export powerhouse Guangdong is feeling the pinch of the United States' slowdown and the yuan's relentless advance, which combined to trim the province's economic growth by 3.6 percentage points to 10.7 per cent in the first half.

Gross domestic product growth fell short of the province's target of a steady average growth rate of 14.4 per cent over the past five years, and compared with a 10.4 per cent rise in the nation's first-half growth, the provincial statistics bureau revealed yesterday on its website.

Blaming the sharp fall on severe snowstorms and floods, a shrinking appetite abroad for Chinese-made goods and the state's macroeconomic policies, the bureau warned that external and domestic demand would decline even faster in the second half and vowed to step up infrastructure investment to boost growth.

Economists fear that Guangdong's dwindling growth would have a ripple effect on Hong Kong, whose businesses operate almost 70 per cent of the province's 90,000 export processing plants.

They also fear that Guangdong, which accounted for 12.25 per cent of the mainland's 13.06 trillion yuan (HK$14.94 trillion) first-half GDP, would put the brakes on the softening national economy.

'The first half's decline was pretty sharp,' HSBC chief economist Qu Hongbin said. 'As long as the US economy remains weak, which is very likely, we expect Guangdong's downward trend will continue and drag down the nation's GDP growth.'