Dongguan's economy not hurt by sex-trade crackdown

Dongguan's economy not hurt by sex-trade crackdown
A card advertising sex services was found at Guoan Hotel in Dongguan.

The prostitution crackdown in Dongguan, Guangdong province, that began early this year has not affected the city's economy, a senior local government official said.

The news refutes reports during the crackdown that the sex trade was a major driver of the city's economy.

In an interview aired by China Central Television on Tuesday, Dongguan Mayor Yuan Baocheng said some key economic indexes, including industrial electricity consumption and exports, showed increasing momentum in the first three months of this year.

"I have always understood that the crackdown on prostitution will not largely affect local economic development, given that the illegal sex industry accounted for only a small percentage of the local economy," Yuan said.

A three-month sex-trade crackdown since February, following CCTV's exposure of rampant prostitution in Dongguan - a manufacturing and trade city in the Pearl River Delta - raised concern over a possible post-crackdown economic slowdown.

During the crackdown, hundreds of entertainment venues, including massage parlours and hotels, were closed, and a number of local officials were put under investigation for alleged involvement in the sex industry.

But "preliminary economic statistics in the first quarter of this year are beyond our expectation", Yuan said.

Dongguan's industrial power consumption increased by about 13 per cent year-on-year in March, indicating an active manufacturing activity, Yuan said.

"Exports, which are yet to be officially announced by the customs authority, also had a good performance in the first three months," Yuan said.

"Frankly, I was surprised to learn that the illegal sex trade industry had become so rampant in Dongguan. We had to admit that such a social evil did exist in the city, and we had to work out measures to tackle the problem," Yuan said.

Early media reports estimated that at least 300,000 people worked in Dongguan's sex industry, and that the sector combined with related services could account for about 10 per cent of the local economy.

But Yuan said that the hotel and entertainment industry along with massage services made up only 1.5 per cent of the city's economy, or about 8.3 billion yuan ($1.34 billion).

"The entertainment industry was not all related to the illegal sex trade industry. We have never calculated how much the prostitution industry contributed to the economy," Yuan said.

Yuan said Dongguan's economy will maintain a stable performance this year, as the city has developed a solid foundation in industrial transformation over the past few years.

The city's economy is expected to grow by 9 per cent year-on-year in 2014, the local government said. Altogether 156 large key projects are planned to drive the economy this year.

Lin Jiang, head of the public finance and taxation department of Lingnan College at Sun Yat-sen University, said Dongguan's economy will maintain its upward momentum in the years ahead if the traditional manufacturing industries relying heavily on processing trade are upgraded and more high-tech projects are introduced to the city.

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