SHENZHEN: The GDP growth of this southern city slowed down in the first half of this year mainly due to yuan appreciation, decreasing global demands and tightened domestic monetary policy, according to latest official statistics.

The GDP of Shenzhen hit 353.3 billion yuan in the first half of this year representing a year-on-year increase of 10.5 percent and up 0.3 percentage points from the first quarter.

However, the growth was 0.2 percent lower than the average level of Guangdong province and was down from 14.7 percent in 2007.

"We have to acknowledge that 2008 will be an extraordinary year... the challenges to the economic and social development are unprecedented," Deng Ping, director of Shenzhen Statistic Bureau, told reporters on Wednesday when releasing the figures.

The city's added industrial value grew by 10.3 percent in the first half, the lowest growth rate over the past 20 years. The annual growth rate stood at 14.6 percent for 2007, 16.1 percent for 2006 and 18.4 percent for 2005, the statistics showed.

As an export-oriented city, the yuan appreciation had cut the industrial output by more than 7 percent for the first half, said Deng.

Meanwhile, the US subprime woes, too, had negative impact on the city's export, which topped among mainland cities for more than a decade, he noted.

The tightened monetary policy had an impact on the financial condition of the small- to medium-sized enterprises (SMEs), which also affected their investment plans, Deng said.

According to Customs figures, the import and export of Shenzhen in the first half of this year amounted to nearly $139.2 billion, up 9.0 percent from a year before, of which export rose 9.7 percent to $81.8 billion and import grew 7.9 percent to about $57.4 billion.

By comparison, the growth of import and export for the whole of 2007 stood at 21.1 percent.

Despite the unfavorable global and domestic environments, the city will put in better performance in the second half given that some of the economic indicators have shown big improvement month-on-month, Deng said.

"Normally, the manufacturing will be accelerated in the second half and so will the added industrial value," he said.

Domestic consumption recorded an increase of 18.2 percent to nearly 108 billion yuan in the first half, of which the retail and wholesale sector contributed about 94.9 billion yuan, up 18 percent from a year ago.

Deng, however, said that the companies have stronger capability to cope with the unfavorable domestic and global environments.

"Some companies, especially the leaders in major industries, including telecommunications equipment, computer and electronics manufacturing, petroleum and natural gas exploration, have overcome the difficulties and maintained fast growth," he told reporters.

(HK Edition 07/28/2008 page2)