The 117th Canton Fair was concluded on Mar 5th. It embraced 184,801 buyers, down 0.7 % from the 116th session and its transaction volume also went down 9.64% to 172 billion yuan (28 bln USD). Lin Jiang, deputy director of the Center for Studies of Hong Kong, Macao and Pearl River Delta and Institute for Free Trade Zone Research of Sun Yat-sen University, said the result is reasonable. It proved that Guangdong’s processing trade enterprises are in trouble. Luckily, Guangdong pilot Free Trade Zone (GD FTZ) can provide an opportunity for these enterprises to transform.
GD’s processing export is under great pressure
According to Lin, the international market is under recession and Guangdong cannot avoid that recession since its economic growth depends a lot on the export.
The labor intensive processing industry had a lion share of GD’s export. The industry faces the problem of increasing labor cost. In the last decade, China’s labor cost increased rapidly and lost its strength compared with countries or areas, such as the Association of Southeast Asian Nations (ASEAN) and India.
Besides, China’s economy is under the “New Normal” that brings a lower economic-growth. Thus, foreign companies become indifferent to Chinese market and gradually put their investment on other emerging countries and regions like India.
In the 117th Canton Fair, processing trade still take a big share, thus it is reasonable to see the decrease of buyers and transaction volume. In short, the prospect of GD’s processing export is under great pressure.