Dongguan City’s Economic Woes: Decline in Manufacturing
The bustling streets and towns of Dongguan City, Guangdong Province, known as the “world‘s factory,” have gone quiet as the manufacturing hub faces a significant downturn. Leasing notices are plastered on the outer walls of factories and vacant shops, and businesses are feeling the effects of reduced demand.
Taxi driver Mr. Zhang and dormitory owner Ms. Lu have both experienced a decline in customers and occupancy, and the surplus of factories and rental notices point to a struggling economy. The GDP of Dongguan exceeded one trillion yuan for the first time in 2021, but the city has hit a rough patch due to weak domestic and foreign demand, U.S. interest rate hikes, and the Sino-U.S. trade war. Many companies have seen a sharp drop in orders and turnover.
The decline isn’t limited to traditional manufacturing industries. Emerging industries such as automation technology companies are also facing the same dilemma as companies reduce investment in automation equipment due to decreased orders.
The decline has led to involution in manufacturing industries, with companies offering low quotations to secure orders, leading to a drop in market prices. Some factories have been forced to close their doors due to serious losses and difficulties, further impacting the local economy.
Dongguan’s over-reliance on foreign trade and single industrial structure has been pointed out as the main problem by Song Ding, a researcher at the China (Shenzhen) Comprehensive Development Research Institute. The city’s struggle to achieve its GDP growth target of 6% looks bleak as it faces the challenges of a changing international economic and trade pattern.
The current economic downturn is a stark contrast to the city’s highlight moment in 2021 and presents a challenging future for Dongguan’s economy. The city will need to diversify its industrial structure and establish resilience to external economic factors to navigate through this difficult period.