(Yicai) Aug. 14 -- Dongguan, a major manufacturing hub in southern China, had the slowest growth in gross domestic product among Guangdong province’s 21 cities in the first half of the year, according to a report by China Newsweek.

Dongguan’s GDP rose just 1.5 percent to CNY526.2 billion (USD72.5 billion) in the six months ended June 30 from a year earlier, the report said yesterday. In the first half of 2022 it grew by 1.6 percent.

That compares with 5.5 percent economic growth for China as a whole and 5 percent for Guangdong. The decline in Dongguan’s growth is due to pressures on industry and slower foreign trade growth, according to experts.

The city, known for its original equipment manufacturing industry and home to more than 10 million permanent residents, first had a GDP of over CNY1 trillion (USD137.8 billion) in 2021. It was CNY1.12 trillion last year, an increase of just 0.6 percent from 2020 and less than the provincial average of 1.9 percent.

The local economy relies heavily on manufacturing and foreign trade, so it faces significant challenges from industrial relocation, lower orders, and trade protectionism, according to Peng Peng, executive president of the Guangdong Society of Economic Reform.

Dongguan’s industrial added value was CNY238 billion (USD32.8 billion) in the first half, down 5.9 percent from a year ago and 0.8 percentage point lower than in the first quarter.

The drop in industrial production had a negative impact on the local economy. For example, Dongguan, known as China’s mobile phone manufacturing hub, only made 200 million units in 2022, half its peak output of 2019.

Dongguan’s dependency on trade was the second highest in China last year, according to Ding Li, an economics researcher at the Guangdong Academy of Social Sciences. The city’s international trade slowed in the first half of this year, with imports and exports dropping 11.3 percent from a year ago to CNY618.6 billion.

With domestic and overseas demand weak, the global consumer electronics market is in a downturn, impacting Dongguan, whose industry faces the challenge of transformation and upgrading, said Li Xiaolin, deputy director of the Regional Economic Research Institute of the China Academy of Macroeconomic Research.

Peng believes that Guangzhou, Shenzhen, and Dongguan are the three major electronics industry cities than can transform and upgrade together.

He suggested that new materials and new energy can rely on Shenzhen’s advantages to form an industrial chain and supply chain, while life sciences and biotechnology can benefit from Guangzhou’s influence.

Editor: Peter Thomas