Thursday 13 November 2008

Guangdong rejects reports of surge in bankruptcies

Guangdong authorities have rejected reports of mass factory closures in the province, but promised several measures to spur the local economy amid a weakening of the GDP growth rate.

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Guanyu said...

Guangdong rejects reports of surge in bankruptcies

He Huifeng
13 November 2008

Guangdong authorities have rejected reports of mass factory closures in the province, but promised several measures to spur the local economy amid a weakening of the GDP growth rate.

Despite reports of more than 50,000 businesses shutting down in the province so far this year, Deputy Governor Xiao Zhiheng said yesterday official investigations showed there had not been a surge in bankruptcies in Guangdong, China News Service reported.
Mr. Xiao said the number of newly registered companies exceeded 90,000.

“It is inappropriate to describe the situation as ‘a surge of bankruptcies’,” he said.

But he admitted that provincial GDP growth in the first nine months had slowed to 10.4 per cent, a 4.3-percentage-point drop compared to the same period last year, prompting the Guangdong government to introduce several measures to avoid a major economic downturn in the province.

According to Mr. Xiao, Guangdong will strengthen co-operation with Hong Kong and Macau, and develop export markets in East Asia, Africa and Russia.

The government will spend more than 2.3 trillion yuan (HK$2.62 trillion) in the coming five years on 222 infrastructure construction projects, Xinhua reported.

Credit-guarantee organisations for small and medium-sized enterprises will soon be set up in 21 Guangdong cities to help businesses raise funds. The government will also invest around 45 billion yuan until 2012 to train labourers, and encourage the development of high-end service and manufacturing industries.

Guangdong Academy of Social Sciences economist Ding Li said Mr. Xiao’s comments underlined the government’s desire to maintain social stability.

“The government has to make the public optimistic about Guangdong’s economic future,” he said. “But we do need to admit that Guangdong has been hit by the financial crisis, much worse than hinterland provinces. The official economic figures showed this year was not too bad. But the worst time will arrive next year.”

He said the first official measure should be to offer residents jobs and more social security, which could greatly promote the growth of domestic demand.

Meanwhile, hundreds of unemployed workers rallied in Shenzhen for back pay and compensation yesterday. More than 500 workers took to the streets to protest at about 8am. Meifu Watong Paper (Shenzhen), which shut down in early September, failed to meet its promise to pay them before November.

Dozens of armed police quickly descended on the area and scattered the protesters. Witnesses said several workers were injured and detained during the clash.

A male worker who joined the protest said he would leave Guangdong after getting the compensation.

“Many of my friends, and friends of friends, have lost jobs recently. I believe the situation will be worse here next year,” he said.