Category Archives: GDP

Guangdong governor focuses on big picture

Guangdong’s governor, Ma Xingrui, gave a press conference today at which he said the province’s GDP is expected to grow to more than RMB10 trillion this year. It is the way this will be achieved, rather than the number, that jumped out at us, however. He said the province will continue to “open up its market to the outside to strengthen its competitiveness”, and his No. 1 priority for the coming year is to build the Greater Bay Area by “finding solutions for cross-border issues, meeting international trade rules and facilitating the easy flow of capital, talents, goods and information within the GBA”.

Priority #2 to #5 were more interesting for a domestic audience: propelling innovation, investing more in the countryside, promoting Lingnan culture, and protecting the environment.

Priority #6 was more intriguing: To optimize the rule of law and internationalization, build a good business environment, and create the most secure, stable, fair, and legal environment in the country.

Roll on, Governor. Let’s see what comes next.

Read more (in Chinese).

Rising incomes boost Guangdong’s finances

Provincial data on public and private finances paint a picture of frugal, hardworking people who are also not afraid to spend. The US-China trade war might take a wrecking ball to the economy in the coming months, but if it does, there are good reasons to believe that Guangdong will have a better chance at getting through it than most other economies facing similar external pressure.

Indeed, despite having to turn on the infrastructure taps from January to April, which resulted in a 14.8% jump in government expenditures, Guangdong still saw government revenue grow 5.8% to RMB445 billion.

And while outstanding loan balances at the banks jumped in the same period, 16.4% to RMB15.4 trillion, deposits also grew 9.9% RMB 21.8 trillion. This was driven by household deposits, which increased 15.3%.

Savers are not panicking. Retail sales continue to grow at above-GDP rates. Meanwhile, consumer prices rose by 2.3%, an increase of 0.1 percentage points over the first quarter and just the kind of number policymakers like to see. Producer prices remain under pressure, rising by 1.0%, but that is at least an increase of 0.1 percentage points over the first quarter.

Guangdong kept steady by investment, drugs

Guangdong’s economy is holding up amid the US-China trade war, although the worst effects of the most recent tariffs and blacklisting actions have not yet shown up in official statistics. In the four months to the end of April – just before the trade conflict went from genteel to gloves-off – GDP growth came in at 6.6% YoY, no change from the January-March quarter. This was despite near-stagnant growth in foreign trade, up just 0.8%. Retail sales (+6.7%) and industrial output (+5.1%) stayed steady, but it was the fourth pillar of the economy that kept growth from being weighed down by weak trade: fixed-asset investment was up 11%.

Perhaps unsurprisingly, investment in infrastructure is surging: up 27.3%. That is twice the growth rate of investment in real-estate (+13.3%). Yet while Guangdong is building more roads, ports, and railways (+34%), it is also investing in longer-term projects as well: water production and supply investment doubled (+100%), while ecological protection and environmental management investment increased by 288.8% (no, that is not a ‘lucky’ typo).

Consumers, meanwhile, are showing no signs of going weak at the knees. While sales of communications equipment continued to grow strongly at +15.1% (we will never give up our smart devices), the fastest-growing sector was Chinese and Western medicines, which jumped 18.9%. The authors of the statistical bulletin at the provincial government helpfully pointed out that, “The vigorous development of smart medical care, which is integrated online and offline, has led to a rapid increase in offline physical pharmacies.” WeDoctor, we assume?

Underneath all this remains a foundation that is our biggest source of confidence for Guangdong, and the Greater Bay Area it propels: private-sector participation in the economy continues to grow, with the tech sector in the vanguard. State-owned enterprises chipped in at +3.5%, but private enterprises fueled growth at +8.6%. Technology-intensive industries were up +9.3%.

Shenzhen’s private firms benefit most from tax cut

Private enterprises accounted for 70% of the corporate savings generated by tax cuts in Shenzhen, according to the city’s tax bureau.

In Q1, a new micro-enterprise inclusive tax reduction policy saved RMB1.354 billion, while a new personal income tax reduction policy saved RMB10.15 billion for individuals. The VAT rate, which was lowered on May 1 last year, generated RMB2.183 billion in savings, while interest income was also exempt for SMEs, saving RMB687 million.

Manufacturers benefited the most from the new policy, saving RMB3.9 billion in tax, accounting for 27.1% of the total reduction.

Read more (in Chinese).

China’s growth slows; markets shrug

April’s economic indicators were released yesterday by the National Statistics Bureau and, perhaps predictably, they sagged, after a strong Q1. Industrial production (+5.3%) and retail sales (+7.2) slowed, while exports, to no one’s surprise, went into negative territory (-2.7%). Fixed-asset investment continued to show resilience, at +6.1% YoY, but it was slightly down from the Q1 number and slightly missed analysts’ expectations.

The numbers worried reporters at the SCMP. Markets, however, didn’t seem to care, as the Hang Seng Index and Shenzhen A-Share Indices rose. Trump Tweet Fatigue may be the cause, but it may also simply be too soon to say.

Guangdong will report its numbers fairly soon, which will give a clearer idea of what the state of play is in the Greater Bay. For reference, the province increased its share of the national total in trade during Q1. We will look for a closer read on industrial production, retail sales, and fixed-asset investment when they are released.

Tianhe leads Guangzhou; Nansha catches up

As we reported previously, Guangzhou’s Q1 GDP was RMB550.77 billion, up 7.5% in Q1. Now we have data on the city’s 11 districts, which shows the Tianhe CBD area – a hub for services – driving growth. It was up nearly 10%, accounting for one-fifth of the city’s total at RMB111.88 billion.

Yuexiu and Huangpu came second and third. However, the fastest moving district was Nansha, which came in at seventh, on the back of its new investments in the technology industry. Construction and manufacturing drove the special economic zone to a 12% YoY growth rate in Q1.

Read more (in Chinese).

‘Big Three’ drive Dongguan Q1 growth

Dongguan’s three smartphone giants – Huawei, Oppo and Vivo – had a strong Q1, with their combined sales accounting for almost two thirds of the city’s 8.5% growth in GDP.

According to the latest data released by the city government, Dongguan’s industrial upgrading plans are well under way. In Q1, advanced manufacturing (+11.7%) and high-tech manufacturing (13.9%) accounted for 53.8% and 40.3% of total output, respectively. The star, however, was “information device manufacturing” – smartphones, notepads, laptops, and other IoT devices – which grew 15.6%. 

Investment figures paint a rosy picture for future growth, too. In Q1, total investment was up 37.6% YoY – and it accelerated sharply in March, which was also when a flurry of new manufacturing projects opened. The growth rate was second only to Guangzhou among all 11 of the Greater Bay Area cities. Driving this was R&D investment, which soared 79.1%, second only to Shenzhen’s. 

Read more (in Chinese).

Zhuhai boosted by Gree as investment slows

Zhuhai’s economy is being held aloft at an above-average growth rate by its key industrial enterprises, especially Gree Group, the home-appliances king, latest data show. However, investment has been slowing recently, and foreign trade is under pressure, with exports declining sharply in Q1.

In Q1, the city’s GDP rose 7.4%, a percentage point above the national average, to RMB67.168 billion. It was the third-fastest growing city in the Greater Bay Area, behind Dongguan and Shenzhen. This was despite a YoY decline of -2.8% in the primary sector (raw materials). Industrial production was up 7.7%, thanks to the contributions of large-scale enterprises. Services were up 7.5%, with retail sales showing a recovery from a slump last year.

Gree, led by the formidable Dong Mingzhu, winner of a billion-yuan bet recently with Xiaomi chairman Lei Jun, had a strong quarter. The city’s home appliance industry was up 21%. The bio-pharmaceutical industry was next best at +12%, while precision instruments and petrochemicals came in at +9.0% and +7.6%, respectively. However, the electronic information industry saw anemic growth, up just1.6%.

More worrying was investment. Overall investment, at +5.7%, was several percentage points slower than the same period last year. This was due to a slump in private-sector investment, which was down 5.9% in the quarter. 

Trade is clearly feeling the effects of a weakening external environment.The total volume of imports and exports was -11.4% YoY, pulled down by a -19% plunge in exports.

Foreign direct investment rose by just1.6%.

In the services sector, retail sales are recovering and domestic demand is improving. Tourism is being seen as a key driver of future growth in Zhuhai. This is especially considering the Hengqin Railway Station opens at the end of the year, which is expected to boost arrivals to the seaside city. The Zhuhai-Hengqin Intercity Railway Line will improve access to both the Chimelong Ocean Resort – which opens a big new phase this year – and the soon-to-open Novotown resort in Hengqin.Read more here (in Chinese).

Guangdong GDP up 6.6%, better than expected

Amid a tough external trading environment, Guangdong has managed to hold up its economy in the first quarter, with GDP up 6.6% year-on-year. This was despite a sharp slowdown in exports and imports.

The provincial statistics bureau said the first quarter’s results were 0.1% higher than its previous forecast, indicating a good start to the year. This was largely due to strength in the services sector, which grew 7.1%. Bright spots were seen particularly in new energy vehicles, up 252.1%, followed by mobile communication base station equipment, up 154%. Retail sales overall were up 6.9%.

This was despite a gloomy mood among exporters and importers attending the Canton Fair, as reported last week. Their pessimism is understandable: exports from Guangdong in Q1 were up just 1.8% YoY, while imports plunged -4.8%. Exports to countries participating in the Belt and Road Initiative rose 4.5% during the period.

Read more in Chinese.