Guangdong Province has focused on green efforts to develop an energy-saving economy, as thousands of high-energy consumption enterprises that generate heavy pollution and low yields have closed down or gone bankrupt in the last two months.
"Some small companies have moved out or closed down since the end of last year," a local resident in Foshan, Guangdong, told the 21st Century Business Herald. The city is one of the main industrial bases in the Pearl River Delta (PRD) Area, which is home to many processing and manufacturing companies.
In fact, noticeable depressions have occurred in the entire delta region.
But the province has not been too anxious about the recession. To promote the development of an energy-saving and clean economy, the provincial government and many professional associations have declared that they would support migrations of manufacturing industries.
Huang Huahua, Governor of Guangdong, highlighted restructuring and updating of processing business as well as industrial gradient transfer at a conference in January.
Most of the migrations have occurred in the high-energy consumption enterprises that generate heavy pollution and low yields.
The province is the first in China to embark on a practice of making energy consumption a compulsory index for officials' career assessments in 2008.
"Many enterprises will face challenges confronting possible global recession, appreciation of the Renminbi and increasing labor costs, especially some small and medium-sized enterprises, but national policies will be the most influential, Guo Weiwen, head of the Guangzhou-based Wanbang Shoe Industry Co., Ltd., told the 21st Century Business Herald.
"Most of the enterprises do not want to move out. But they have to immigrate or close down if governments won't provide any policy support for the processing and manufacturing industry,"said Guo.
"The energy consumption per 10,000 yuan (US$1,390) of gross domestic product should reach a annual decrease of 4.61 percent from 2007 to 2010. The consumption for unit gross domestic product of the district should be reduced to 0.9 ton of standard coal by the end of 2008,"Feng Yongkang, deputy head of the Nanhai District Government in Foshan, said.
This means that the processing and manufacturing enterprises located in the district will face severe trials and they will have to either move out or declare bankruptcy.
The Pearl River Delta Area is in a transition period of rapid industrial growth. Without upgrading, the area cannot realize the growth of labor-intensive industries in step with increasing profits, said Lu Kaiyin, Vice President of the Guangdong Institute of Socialism.
The area should shift from an extensive economy to an intensive economy, and focus on technological innovations, said Lu.
"Some a thousand small and medium-sized companies have gone bankrupt in the last two months in Guangdong, at a conservative estimate," said the Guo.
(China.org.cn by Yang Xi, February 5, 2008)