Guangdong faces weak growth as US-China trade strains bite

Once an economic hub, Guangdong now shows the strain of China’s shifting economy, with shut-down factories and quiet streets reflecting a wider slowdown across the southern export hub.

The United States and China remain locked in drawn-out trade talks. Washington has cut the extra tariffs on goods from China to 30% while negotiations continue. With exports of almost $821 billion in the previous year, Guangdong remains exposed to the effects of higher tariffs.

The recent numbers show reduced economic activity

Guangdong expanded by only 3.5% in the previous year and missed the target for a third year and falling below the 5% national rate.

Shenzhen remains the tech hub of China and maintains its status as one of the richest cities in the country, and topped national average last year. Guangzhou, the province’s capital, grew by only 2.1%. While the neighbor Foshan, a center for furniture and home appliances, rose 1.3%. Shantou, a special economic zone, grew by only 0.02%.

Guangdong’s trade history dates back a few centuries. It was among the few cities in China that opened trade for foreign merchants.  In 1957, after the first Canton Fair, Guangdong became the main channel for much of the nation’s overseas trade. 

The province’s GDP per capita rose over 220-fold between 1978 – 2018, and the provincial economy today is larger than South Korea. However, even before Trump took office again, the move of low-cost production to cheaper hubs was already slowing growth.

Property prices have recovered slowly in the province as compared with other wealthy regions. Guangdong also hosts some of China’s best-known developers, such as Kaisa, Evergrande Country Garden, and Vanke. 

Analysts suggest that the housing market has weighed on both shoppers and companies, with retail and other gauges trailing national averages.

Because Guangdong sends more tax to the central government than other provinces, the slowdown carries national consequences. In recent years, a broader downturn has led Beijing to redirect a larger share of that revenue to support growth in other poorer regions.

Even tech exporters are diversifying

Guangdong-based BYD, the electric-vehicle maker, is also looking to expand production overseas, as reported earlier by Cryptopolitan. Trump’s cancellation of “de minimis” tax exemptions for smaller parcels would hit Guangdong especially hard, since many Temu and Shein suppliers are based there.

Few places show the loss of momentum more clearly than Ronggui. Ronggui was the first such hub to record total industrial output above Rmb100 billion, and Deng Xiaoping once praised the area. But growth tied to refrigerators and air conditioners has stalled as margins for mid-range goods narrow and higher-tech sectors take root elsewhere. Nearby Foshan’s growth has also dropped.

The cooling is felt on the street. “I’m just about able to make my living,” said Zhou Jingjing, who sells dumplings near an industrial area, noting that fewer factories now ask staff to stay for overtime, cutting demand for evening snacks. Liang, a metal worker at a refrigerator plant in Ronggui, said his monthly pay fell to approximately Rmb7,000 – Rmb9,000 over the past 2 years as demand during the covid-era reduced. He still believes the job is steady, but his apartment has lost value in the nationwide property slump. “I have a mortgage here and my kids are in school,” he said. “I don’t dare go out [and find other work].”

Sign up to Bybit and start trading with $30,050 in welcome gifts