China’s Pearl River Delta slows

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The Pearl River Delta is the original heart of China’s industrialisation process. The blog first visited 20 years ago, as China slowly opened up to the West, and was amazed to discover that cities such as Guangdong were already as large as Hong Kong. Today, along with Shanghai, the region is the manufacturing capital of the world.

Now, however, The Guardian reports that the area is being badly hit by the global recession. 67000 small firms collapsed in H1, with toy and textile firms badly hit, as raw material costs escalated. Then in Q3, foreign-owned firms were hit by tighter credit markets. More recently, there has been “a sharp drop in US and European consumer demand”.

The blog noted in December that it was unlikely China could ‘decouple’ from the West, with 80% of the Delta’s GDP export-related. Those Asian chemical companies who rely on exports to China’s manufacturers, are already suffering. And with China’s government focused on supporting the rural economy, the blog worries that China’s chemical demand, outside agrochemicals, may take a long time to recover its recent growth rate.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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