Category Archives: GDP

Hong Kong’s woes deepen as job cuts loom

With unemployment jumping to 3.2% by the end of November, and further job losses likely in the beleaguered airline industry, Hong Kong’s economic woes are starting to show up in official data as workers bear the brunt of the fallout from the city’s six-month-long protests.

Cathay Pacific, which employs 27,000, is putting on a brave face after announcing yesterday that passenger volumes were down nearly 50% in November. Several senior staff have just resigned, but no mass layoffs have yet been announced. Hong Kong Airlines, however, seems to be on life support, with planes impounded, and it seems highly unlikely the carrier will survive as passenger throughput in Hong Kong continues to nosedive.

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Huizhou slows further

Huizhou’s economy slowed further in October, with industrial output and retail sales both down, according to the latest official data. However, fixed-asset investment is kicking in.

From January to October, industrial output grew just 2.3% YoY, 0.4 percentage points down from the year to September. The traditional staple of the electronics industry grew by just 1%.

Fixed-asset investment surged by 15.5%, accelerating in October to grow 1.7 percentage points faster than the year to September, and 11.2 percentage points faster YoY. Industrial investment rose 21.8%, 3.4 percentage points up from the year to September; infrastructure investment grew by 19.3%, 0.1 percentage points up; and real estate investment increased by 21.1%, 1.1 percentage points up.

Total retail sales grew by 8.1%, 0.1 percentage points slower than the first three quarters. Among them, wholesale, lodging and catering industries have seen faster growth while retail industry has seen slower growth at 8.5%.

Prices kept rising, with CPI jumping 2.8% from January to October, 0.1 percentage point up from the first three quarters. All categories of products listed, except traffic and telecommunication products, rose.

Guangdong industrial profits outperform

As has been well-documented by now, the Greater Bay Area has been hit harder by the US-China trade war than the rest of China. This is simply because it was more exposed to external trade when the tariffs began to be imposed; the higher you are, the further you have to fall. However, the region has certain strengths that are holding up, and it looks increasingly like it will recover quicker and be in better shape once the inevitable upturn in the country’s credit cycle begins again. 

The most important of these strengths are Guangdong’s longer history of international trade, and its greater weighting toward private enterprise. These enable the province’s leadership, in politics and business, to pivot more quickly when external circumstances change. That is what seems to be happening now, as companies trim costs and refocus their sales teams on domestic consumers while exploring new overseas markets along the Belt and Road Initiative. 

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Shenzhen confirms 6.6% growth, blames nothing

After the provincial government leaked Shenzhen’s GDP headline number for the first three quarters yesterday, causing a rush of commentary by bloggers and real-estate analysts, the city government decided today to clarify the reasons why its economy slowed so sharply, to 6.6% from 7.4% in the first six months.

Understandably, the report was full of numbers that the Shenzhen Daily tried to portray in a positive light.

At the heart of the data was an unmistakeable weakness: a sharp slowdown in industrial output and input, as we had expected in our report published yesterday.

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Services pumping in hi-tech Guangzhou

More detail is dribbling out in local media after Guangzhou reported strong GDP numbers last week. One of the clear standouts was growth in the services sector, especially the so-called “modern services industry”, which is dominated by software and other IT-related services.

Although the city is often thought of as a bastion of heavy industry and manufacturing, while Shenzhen is usually described as the “tech hub”, Guangzhou’s economy is increasingly being driven by software and other IT-related services. According to official data, this sector accounted for 68.6% of Guangzhou’s GDP in the first three quarters, an increase of 0.1% over the first half of the year. Its added-value was up 15.5% YoY.

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Shenzhen sees sharp slowdown in Q3

Something is going on in Shenzhen. The city has not yet released any reports on its economic performance in the first three quarters, yet provincial data show that the city’s GDP growth dropped sharply in Q3.

Private commentators have been reporting the provincial data today, many with alarmist analysis. This is rightly so: the 6.6% growth number recorded by Shenzhen for the first three quarters of this year follows 7.4% reported for the first six months. If accurate, that is an unprecedented quarterly slowdown.

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Dongguan tops GBA growth charts

The Greater Bay Area’s fastest-growing economy is not Guangzhou or Shenzhen, but Dongguan, which saw its GDP rise 7.2% in the first three quarters of this year – an acceleration from 6.9% recorded in the first half.

Driving this growth was the city’s staple of manufacturing – both in terms of output and input. In the year to end-September, the added value of industrial enterprises above designated size rose by 8.0%, while fixed-asset investment surged by 18.1%.

September seems to have been a particularly strong month. Industrial production was up 15.9% over August, which was a clear departure from a steadily slowing month-on-month trend up to that point.

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Guangzhou: the sum of some parts

As we reported earlier this week, Guangzhou is putting in a relatively strong economic performance this year, despite the worst effects of the US-China trade war weighing on trade, the city’s traditional engine of growth. This is largely because it has new growth nodes, not only in certain industries or sectors, but also in its key districts. It is made more evident by a breakdown of the sum of its parts, which shows some of those parts are doing incredibly well, while others are lagging.

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Retail sales keep growing

Retail sales continue to be a pillar of strength for the Guangzhou economy. In the first three quarters, they rose 8.2% to RMB 734.695 billion. This was well above the 7% target set for the year, and 0.6 percentage points higher than the same period last year. After a blip in the early part of the year, it has stabilized at more than 8% for five consecutive months.

This is music to local officials’ ears, of course. Against the backdrop of the difficult external trade environment, local demand has had to fill the gap. This it appears to be doing, as consumers, businesses and government all opened their wallets to spend on consumption, not just investment.

Two key drivers of consumption have been cross-border e-commerce, and the booming “night economy”.

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