China to Help Guangzhou Factories

Offers assistance to help companies contend with rising production costs

China has earmarked $5.86 billion to help struggling factories in the Pearl River Delta fight soaring production costs, a report said July 23. The money will be used to encourage small and medium-sized factories to move their operations to remote parts of Guangdong, the province's Communist Party Secretary Wang Yang reportedly said.

"We have been thinking of ways to minimize the burden on factories such as reducing government levies," Wang was quoted as saying in a report by Hong Kong's The Standard newspaper. "But we are also introducing measures to help factories move to eastern, western, northern and central parts of the province."

Other measures included concessions on electricity, water charges and government fees for factories relocating to the inland parts of the province, Wang said.

The Party Secretary said about 35,000 factories had cancelled their registration in Guangdong between January and May this year, up 35.7% year-on-year, according to the report. But he added that about 40,000 new enterprises had registered with the city over the same period.

Rising production costs and the rise in China's currency have forced many labor-intensive operations in the Pearl River Delta -- the country's manufacturing hub -- to shut down or move to inner provinces such as Henan and Sichuan in recent months.

Copyright Agence France-Presse, 2008

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