Long known as China's economic powerhouse thanks to a booming manufacturing economy in cities like Shenzen and Guangzho, Guangdong generates around 21.4% of China's GDP, making it roughly equivalent to that of Russia for several years now.
With the world's largest electronics exports market, China plays a key role in the global electronics market and Guangdong's manufacturing base in the Pearl River Delta is in the driver's seat. Mechanical and electrical product exports went up by 17.4% last year, making up 69.1% of the province's total exports.
Furthermore, in 2018, Guangdong's import and export volume exceeded 7.16 trillion yuan (1bn) for the first time off the back of a booming commodities export market.
However, even Guangdong was not immune to the disruption caused by the global COVID-19 pandemic. The province, which relies on long supply chains, saw its imports decline slightly in 2020. Fortunately, this was eclipsed by its 2021 performance, which saw exports exceed 8 trillion yuan for the first time in line with soaring Chinese exports following a resurgence in overseas trade.
This has provided a strong foundation for ongoing growth in 2022. Although it's still early days, estimates from the Guangdong Sub-Adminstration of GACC suggest the province witnessed sustained import and export growth in January and February 2022, marking a year-on-year growth figure of 4.6% to reach 1.24 trillion yuan.
Guangdong's top trading partners
Guangdong has maintained consistent growth with its top five trading partners, who overwhelmingly drive the province's booming import and export market. These are:
In October 2021, trade with the EU exceeded 20 percent for the first time, marking a 34.5 percent increase year-on-year. Within the EU, the five top trading partners are Germany, Netherlands, France, Italy and Spain, which account for 67.9% of Guangdong's overall trade with the EU.
Trade with EU partners was driven by a boom in exports of mechanical and electronic goods, which increased by 38.4% to the region, as well as imports from the EU which went up 11.3%. The export of labour-intensive goods, including garments, accessories, toys and plastics products, also grew, supplementing the province's diversifying economy.
Development goals for Guangdong's import / export market: 2021-2025
Guangdong's development goals for the next four years are geared towards building on the successes of the last decade and, ultimately, sustaining the province's steady economic growth.
Critical to Guangdong's development goals is its emerging digital services and trade sectors. For this reason, Guangdong aims to ensure its trade volume in these areas will stay above 15%
This means Guangdong's total service trade volume will be no less than 4.5 trillion yuan with an eye to maintaining its position in the top three most productive provinces of China.
As a key area of growth, the region also aims to keep service outsourcing volume growing above 5%.
The role of trade finance
Guangdong's foreign trade growth is impressive not only on a national scale within China, but globally. Trade finance has played a pivotal role in the province's fortunes, with financial institutions providing billions of yuan to micro, small, and medium-sized foreign trade enterprises.
With credit lines quickly maxing out, traditional banks simply can't keep up with the pace of change in the province. Exports ultimately need effective alternative financing solutions to maximize their potential.
If you're looking to finance your growth in Guangdong or other regions of China, MODIFI offers easy and swift solutions for sellers looking to improve their cash flow. We offer seller finance in the form of non-recourse export factoring, covering buyers' credit risk so sellers can export with peace of mind. Check our blog for more details on our services.