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%.