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By Zhou Xin
BEIJING, Jan 8 (Reuters) - Guangdong, a province at the heart of China's economy, saw growth slow sharply last year as exports plunged, battering factories and sparking an exodus of migrant workers, its deputy governor said on Thursday.
Guangdong, which produces nearly a third of all of China's exports, had suffered its toughest year since the Asian financial crisis a decade ago, Huang Longyun told a news conference.
Provincial GDP growth slowed to 10.1 percent in 2008 from 14.7 percent a year earlier, while export growth tumbled to 5.6 percent last year from 22.3 percent in 2007, he said.
"The situation is grim," Huang said, noting that the Pearl River Delta near Hong Kong had borne the brunt of the slowdown.
Economists said that this year could be harder still on the province that is home to so many of the labour-intensive, low-technology factories that have powered China's export juggernaut over the past decade.
"Guangdong's GDP growth rate may fall to 7 percent in 2009, about half of its average over the last 30 years," said Cheng Jiansan, an economist with Guangdong Academy of Social Sciences, a think-bank based in the provincial capital of Guangzhou.
"The growth model of Pearl River Delta has come to an end," he said. "The financial crisis just makes the doomsday come a little bit earlier."
Huang, the deputy governor, said that as many as 62,400 companies went bust in 2008 and that about 600,000 migrant workers had left the province for their homes in inland China.
But Cheng said the real picture could be far worse.
About 5 million migrant workers had left Guangdong from an original base of more than 20 million and another 5 million may leave in 2009, he estimated.
The downturn in Guangdong's exporting fortunes has also partly been the result of deliberate policies of the central government to move up the value chain in manufacturing, beyond the shoe and toy factories that have been so successful but also highly polluting.
Questions have been raised about whether such an economic transformation was premature, but officials and academics have defended the policies and the objectives.
"I think Guangdong should speed up industrial upgrading rather than delay it," said Yuan Yiming, a professor at the province's Shenzhen University.
"There is certainly no future in relying on low-end and low value-added manufacturing," he said.
Wang Yang, the provincial Communist Party boss and an important ally of Chinese President Hu Jintao, recently published an opinion piece, saying that Guangdong would persist on the path of modernising its industrial base.
"Restarting outdated capacities for the sake of growth would just be like drinking poison to quench thirst," Wang said. (Editing by Simon Rabinovitch and Tomasz Janowski)