Factory closures slowly declining

BEIJING: The number of factory closures in China's southern manufacturing heartland is slowing as government measures to help companies weather the downturn take effect, the governor of Guangdong province, Mr Huang Huahua, said yesterday.

The 'situation for enterprises is slowly getting better', Mr Huang said in reply to a reporter's question about whether government aid and policies - such as reducing companies' tax burdens and freeing up loans for small and medium-sized enterprises - had made any impact.

The governor then went on to paint a cautiously optimistic picture of conditions in China's hard-hit export base, telling reporters that the employment situation 'was quite good' and that there have not been large riots or protests linked to company closures or bankruptcies, although the local government remains 'highly concerned' about social stability.

He made the comments at a press conference held on the sidelines of the annual meetings of the National People's Congress, or China's Parliament.

Reviving the country's wilting economy, creating jobs and boosting domestic consumption top this year's agenda.

Guangdong, which produces nearly a third of China's exports, has borne the brunt of the global slump in foreign demand, with the province recording its worst set of growth figures in decades.

Its gross domestic product (GDP) growth tumbled to 10.1 per cent last year from 14.7 per cent in 2007, while its export growth fell to 9.4 per cent from 22.3 per cent.

Mr Huang admitted that the province, which accounts for about 12 per cent of China's economic output, is facing its toughest year, but said he was confident that Guangdong would hit a target of 8.5 per cent GDP growth this year.

The province aims to do this by stimulating domestic demand for property, vehicles, consumer electronics and tourism; supporting exports by cutting related taxes; and increasing investment in big infrastructure projects, he said.

Turning to another area of concern, Mr Huang gave figures to show that the job situation for migrant workers was not as bleak as originally thought.

There have been reports of a slew of factory closures and bankruptcies in Guangdong which attracts much of China's rural labour. Millions of migrant workers are said to have lost their jobs and returned home to the countryside, fuelling fears of unrest.

Mr Huang said there were about 19 million migrants from other provinces working in Guangdong. Of the 10.25 million who left to go back home for the Chinese New Year holidays in January, 9.46 million had returned and 7.88 million had secured jobs.

Of those employed, 82 per cent had returned to their previous positions. The government then helped find work for a further 1.22 million migrant workers, leaving 466,000 without permanent work.

'We will continue to work hard to resolve the job situation. We will strike hard at bosses who run off without paying wages, and ensure the steady growth of enterprises,' said Mr Huang.

At a separate press conference yesterday, China's top official in charge of rural affairs suggested that the wave of homeward-bound migrants had eased.

Mr Chen Xiwen, director of the Office of the Central Rural Work Leading Group, said the country had not witnessed a new wave of migrants returning jobless to the countryside since factories started reopening a month ago after the week-long Chinese New Year holiday.

He added, however, that China still has at least 20 million unemployed migrant workers who lost their jobs because of the global economic crisis, or about 15 per cent of its 130 million migrant workers.

Despite the challenging circumstances, Mr Huang said Guangdong would push forward with its plan for industrial restructuring and shift its economy away from low-value manufacturing to higher-value industries based on innovation and research and development.

But he added that there was still a need and a role for labour-intensive industries, albeit upgraded with better technology, to play in job creation in China.