Dongguan's mayor insists 'world's factory' will hit its 8 percent growth target

The mayor of Dongguan, Yuan Baocheng, has denied rumors of large-scale factory closures in the Guangdong province city, insisting it will hit its annual gross domestic target of 8 to 8.5 percent this year.

The Pearl River Delta manufacturing hub built its name as "the world's factory" on the labor-intensive processing trade and attracting huge overseas investment .

Reports have suggested, however, that at least 4,000 factories in the city went out of business or moved to other cities or countries with lower labor costs in 2015.

But Yuan insisted on Thursday that just 500 enterprises closed last year, and claimed the city drew new overseas investment worth more than $5.32 billion, bringing its annual growth in 2015 to 17.5 percent.

Moreover, he said the number of organizations operating in the city had grown steadily by 10 percent for the past three years, and now number around 720,000.

"I don't think losing 500 companies out of 720,000 is too scary a prospect. The numbers have been grossly exaggerated," Yuan said.

Addressing media questions that there has been a so-called "wave of bankruptcy in Dongguan" in the past four years, he told the annual session of Guangdong's provincial legislature in Guangzhou on Thursday: "Many overseas-funded enterprises and especially those with investment from Hong Kong and Taiwan are facing great pressure in terms of labor costs.

"Some in the processing trade have left Dongguan for places with lower costs like Vietnam, which has stirred up strong public reaction.

"However, we have seen exciting export growth by local enterprises in emerging industries, such as smartphones. We have continued to provide huge support to maintain steady growth for the city's exports," he said.

Yuan used the example of Dongguan-based Chinese cellphone maker Oppo Electronics Corp, which saw a 91 percent increase in exports last year.

He said Dongguan has been transforming itself from a traditional industrial heartland into a modern high-tech hub, claiming more than 300 high-tech firms were established last year and at least 200 will be created this year.

Lin Jiang, a finance and taxation professor at Guangzhou-based Sun Yat-sen University, who closely follows Dongguan's development, said its officials had pursued a wise strategy to develop emerging industries such as high-tech electronics and e-commerce, because of the boom of private firms in the city.

"However, to attract startups, the Dongguan government still needs to greatly innovate its finance, tax and information management systems, and seek cooperation with nearby free-trade zones in Guangzhou and Shenzhen," said Lin.

More than 200 development projects, industrial parks and important science and technology programs, worth a total investment of more than 400 billion yuan ($60.84 billion), have been introduced in Dongguan since 2012, said Yuan.

"Collectively they will create industrial output value of 1 trillion yuan once full production is up and running, which is the equivalent of creating a new Dongguan.

"This has laid the foundation for Dongguan's future development and is why the city is confident of maintaining economic growth above 8 percent."

xujingxi@chinadaily.com.cn

(China Daily 01/29/2016 page14)