The southern Chinese province of Guangdong, long the engine of the country’s low-cost manufacturing boom, is facing a stark slowdown, with empty factories and struggling local businesses highlighting the structural challenges and trade uncertainties confronting the region, according to the Financial Times.
Once famed for its bustling shoemaking hubs and vibrant nightlife catering to thousands of foreign and domestic buyers, towns like Houjie have seen many factories shutter, leaving surrounding restaurants and shops in decline. Li Jilei, a chef who moved to Houjie more than a decade ago, said business had dried up as manufacturers relocated to Southeast Asia. “A lot of factories have left… our kids are at school here. We can’t move ourselves,” he explained.
Trade tensions between China and the United States have exacerbated Guangdong’s woes. Although Washington has temporarily capped additional duties on Chinese goods at 30 percent while negotiations continue, the province — which exported nearly Rmb5.9 trillion ($821 billion) last year — remains highly vulnerable. Alicia García-Herrero, chief Asia-Pacific economist at Natixis, told the Financial Times: “The companies [in Guangdong] are at the core of the trade war. It’s going to be massive.”
Guangdong’s economic growth has slowed sharply in recent years. The province grew just 3.5 percent last year, missing its target for a third consecutive year and trailing the national average of 5 percent. While Shenzhen, a high-tech hub, outpaced the national rate, cities such as Guangzhou and Foshan grew just 2.1 percent and 1.3 percent, respectively, with Shantou barely registering any growth.
The retreat of low-cost manufacturing predates the latest tariffs, driven by rising wages, competition from Southeast Asia, and slowing domestic demand. The property sector slump has further weighed on local consumer and business confidence. Guangdong is home to several heavily indebted developers, including Evergrande, Kaisa, Vanke, and Country Garden, which have contributed to sluggish retail and investment metrics.
Analysts warn that Guangdong’s slowdown has national implications. The province is the largest contributor to central government tax revenue, and a weaker local economy has forced Beijing to redirect funds toward poorer regions. “The overall economy is not doing very well, [but] you still have to pay your taxes,” noted Sam Kwok, an analyst at Fitch Ratings.
Even high-tech exporters are feeling the pressure. BYD, the electric vehicle manufacturer based in Guangdong, is reportedly exploring overseas production, while small-value shipment exemptions revoked by the Trump administration are expected to hit suppliers to platforms like Shein and Temu disproportionately.
Ronggui, a subdistrict in the Pearl River Delta once praised by Deng Xiaoping for its industrial output, illustrates the province’s stalled promise. Factories producing air conditioners and refrigerators have seen margins shrink, and workers such as Liang, a metal worker, report declining incomes — from Rmb9,000 to Rmb7,000 monthly — as export demand slows. Street vendors like Zhou Jingjing also feel the pinch, with fewer factories requiring overtime for their staff, reducing evening sales.
As Guangdong grapples with the double challenge of structural shifts and external trade pressure, residents find themselves tied to the region by mortgages, schools, and limited alternative employment opportunities, leaving many cautiously navigating a slowing economy.
