Guangdong GDP Growth Slumps to 3.5% Amid US-China Trade Tensions

Recent economic developments in Guangdong indicate a slowdown in growth, primarily attributed to escalating trade tensions between the United States and China. According to multiple reports, the region has experienced reduced economic activity, with even the technology sector showing signs of strain as companies seek to diversify their supply chains [1]. This trend underscores the vulnerability of China’s manufacturing and export-driven economy to external trade pressures.

Guangdong’s GDP growth in the previous year was recorded at 3.5%, missing the target for the third consecutive year and falling below the national average of 5%. Cities like Guangzhou, the provincial capital, saw growth of only 2.1%, while Foshan, a major center for home appliances, expanded by a mere 1.3%. Shantou, a special economic zone, recorded an almost negligible 0.02% growth [1]. These figures reflect a broader trend of slowing industrial output, particularly in sectors such as refrigeration and air conditioning, where margins have narrowed and demand has dropped.

The economic slowdown is evident in daily life as well. Industrial workers report declining incomes, with one refrigerator plant worker in Ronggui stating his monthly pay had fallen to approximately RMB 7,000–9,000 over the past two years. Despite this, many remain hesitant to seek new employment due to personal obligations such as mortgages and education for their children [1]. Meanwhile, retail activity has also weakened, with local vendors noting a decline in demand for evening snacks due to reduced factory overtime.

Analysts suggest that the housing market has weighed on both shoppers and companies, with retail and other economic gauges trailing national averages [1]. Property prices in Guangdong have recovered more slowly than in other wealthy regions, despite the presence of major developers like Kaisa, Evergrande Country Garden, and Vanke. The broader property slump has also affected workers' asset values, compounding financial pressures.

Because Guangdong sends more tax revenue to the central government than other provinces, the slowdown carries national implications. In recent years, Beijing has redirected a larger share of Guangdong’s revenue to support growth in poorer regions, highlighting the province’s critical role in national economic planning [1].

Even tech exporters, traditionally a pillar of Guangdong’s economy, are diversifying. BYD, the electric vehicle manufacturer, is expanding production overseas. Analysts note that Trump’s cancellation of “de minimis” tax exemptions for smaller parcels would hit Guangdong particularly hard, as many Temu and Shein suppliers are based there [1].

The weakening demand from China has had a ripple effect on global supply chains, with multinational firms such as Applied Materials reporting reduced forecasts due to the shifting landscape [2]. Analysts suggest that the ongoing trade restrictions and export curbs imposed by the U.S. have created an uncertain environment for foreign investors and local businesses alike, leading to a cautious approach in capital allocation and production planning.

Amid the uncertainty, some analysts have pointed to potential policy interventions by the Chinese government to stabilize household consumption and support economic activity [1]. However, the focus remains on how external pressures are impacting internal growth dynamics, particularly in a region like Guangdong, which has historically been a key engine of China’s economic expansion. The diversification efforts observed in the tech sector suggest that companies are actively seeking alternative markets and production bases, further signaling a long-term structural adjustment in response to trade tensions.

The situation is being closely watched by international investors, with many assessing how prolonged trade disputes could reshape global manufacturing and trade routes. While the exact extent of the slowdown remains to be seen, the early signs point to a cautious outlook for the near term. The government’s ability to mitigate the impact through domestic policy measures will be a key factor in determining whether Guangdong can maintain its economic momentum in the coming months.

Source:

[1] Guangdong faces weak growth as US-China trade strains bite (https://www.mitrade.com/au/insights/news/live-news/article-3-1066321-20250825)

[2] US-China trade war: Latest News and Updates (https://www.scmp.com/topics/us-china-trade-war)