Factories in Dongguan, one of China’s biggest manufacturing bases, are cranking up production and hiring more workers in signs of improved sentiment after a brutal year for the export sector.

Exports fell 24 percent in the first half of the year in Dongguan, Li Yuquan, mayor of the city of 10 million people just north of Shenzhen, said Wednesday.

"Dongguan is closely linked to the international markets, so the financial crisis has had a strong impact on us," he said.

Li said 342 of the approximately 15,300 foreign-invested enterprises in Dongguan had shut down or relocated from the city in the first six months of 2009, representing an investment value of about US$170 million. That is down from 420 business closures over the corresponding period in 2008, which he used to suggest that the worst may be over.

Dongguan’s job situation, although worse than last year, had also improved markedly in recent months, he said.

"Each quarter is getting better and better," he said.

On the ground, there were signs to corroborate his optimism.

At a major Nokia manufacturing facility in Dongguan, the plant’s general manager C.K. Choi said its work force was expected to grow by 15 percent to more than 8,000 workers by the end of the year as consumer demand for mobile phones picked up.

Export revenue in the first half was already up 5 percent at the facility, which makes more than 100 million phones a year.

Choi said 2010 would be similar if not a little better.

Harley Seyedin, an energy executive and head of the American Chamber of Commerce in southern China, said power generation in Guangdong in April had already matched year-ago levels and was rising fast, suggesting industrial output was being ramped up.

"What does that mean? Those factories which remain have more orders and they’re making up the difference," he said.

Economic growth in Dongguan had averaged a booming 18 percent each year for the past three decades, but the city’s economy only expanded by 0.6 percent in the first half of 2009, Li said.

Li said the city’s goal this year was to achieve 10 percent economic growth, but it will be difficult to hit that target. "We are really facing great pressure," he said.

But at a time when exporters are hoping for strong Christmas orders from Western customers, others, especially smaller players, are not quite so bullish.

"Many people still don’t expect a major increase in orders," said the head of the Taiwan Businessmen Association in Guangzhou, Cheng Feng-yuan, who runs a 700-person curtain factory.

"To see if there’s a more lasting economic recovery, we really have to first wait until the third and fourth quarters." (SD-Agencies)