Chinese officials grapple with slowdown

updated 2:05 p.m. ET Feb. 27, 2009

GUANGZHOU, China - They booked a big meeting room in the five-star White Swan Hotel, invited a bunch of foreign diplomats and promised to answer questions Friday about a bold new economic blueprint for Guangdong province, China's largest factory hub.

But at the last minute, Chinese officials nixed the plan for the Q&A session. Instead, a second-tier bureaucrat gave a dry 90-minute speech larded with the latest Communist Party slogans and buzzwords. Then, he hurried away, saying he had another appointment.

It was a good example of how the global economic crisis has seemed to unnerve many Chinese officials in this once-booming, freewheeling part of China. For the past 30 years, they've grown used to boasting about eye-popping, double-digit economic growth. Their biggest worries have been making sure enough labor, energy and raw materials were getting to the thousands of factories they lured here from America, Europe and elsewhere in Asia.

But now officialdom is facing a steady stream of bad news. Last year, the government said, about 62,400 businesses — mostly small and medium-size factories — shut down in Guangdong, and more are expected to collapse in the coming months. About 20 million migrant workers — 15 percent of the nation's total — lost their jobs last year, and masses of them are roaming the region looking for work.

Ragged groups of migrant workers pull their luggage along the major roads in Guangdong's capital, Guangzhou, once known as Canton. Many laborers camp out in public parks as they await word on jobs.

A long drought
Migrant worker Huang Fumei and two of her friends were living on a stone park bench near Guangzhou's financial district. She said she arrived four days ago and first looked for factory work in the city of Dongguan, about an hour train ride south. But there were no openings, so she came to Guangzhou and was hoping a friend would call with some new job leads.

"I'm thinking about going back home," said Huang, 28, from a village outside the eastern city of Nanjing. "But there's no work back home on the farm either. We're in the middle of a long drought and nothing is growing."

The global economic woes have walloped Guangdong especially hard, because the province produces one-third of China's exports. Factories in the province's Pearl River Delta region — close to Hong Kong — make everything from Honda sedans to Barbie dolls, iPods and Nokia phones. About 40 percent of Guangdong's exports go to the U.S.

Guangdong's export growth tumbled to 5.6 percent last year, compared to 22.3 percent in 2007, the government said.

In recent weeks, leaders of prosperous Guangdong cities including Shenzhen and Dongguan have announced economic growth estimates for 2009 that are the lowest in three decades. Shenzhen, which had average annual growth of 27 percent between 1980 and 2006, forecast growth of 10 percent this year.

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