In recent years, many areas in mainland China have been promoting the development of the “night economy.” The Dongguan City Government in Guangdong Province released a plan on Monday (14th) to introduce a series of new consumption policies aimed at “activating nighttime consumption energy” and streamlining approval procedures for various entertainment venues. However, when trying to access the webpage again today (15th), it displayed a “404” error, indicating that the webpage could not be accessed.
Experts suggest that the authorities in Dongguan are trying to boost the local economy and consumption through the adult entertainment industry, which they consider a desperate measure to address the economic challenges. Dongguan serves as a showcase and microcosm of the entire Chinese economy. The economic situation in Dongguan mirrors that of the whole of China and lacks any reasonable solution.
The “Implementation Plan for Promoting High-Quality Development of Service Consumption in Dongguan City” issued by the Dongguan Municipal People’s Government on the 14th emphasizes the development of gourmet economy, transformation of hotels into comprehensive establishments, enriching cultural and entertainment consumption, activating nighttime consumption energy, and streamlining approval processes for performances at bars and entertainment places.
Although the authorities did not explicitly mention the adult entertainment industry, Dongguan’s infamous “Dongguan-style services” have long been renowned, with the adult industry once playing a significant role in the local economy. However, following the controversy surrounding these matters, the webpage was promptly taken down within a day.
According to Taiwan’s “Liberty Times,” Dongguan’s promotion of the “night economy” and the streamlining of approval processes have stirred up controversies over the resurgence of the adult entertainment industry, leading to a swift takedown of the webpage by the Beijing government.
As reported by Hong Kong media outlet “HK01,” the adult entertainment industry in Dongguan heavily relied on the protection of the government and law enforcement officials internally for its growth. At its peak, Dongguan’s adult industry, including related underground activities and associated sectors, generated an annual economic benefit of nearly 50 billion Chinese Yuan (approximately 7.02 billion US dollars).
Recently, former editor-in-chief of the CCP’s official media “Global Times,” Hu Xijin, posted that the “slump in adult industry is an important reason for the decline in consumption,” and advised not to broadly define “yellow” or “adult content,” sparking significant controversy and leading to the deletion of the post.
In response to this, Professor Fan Jiazhong from Taiwan University’s Department of Economics, in an interview with Dajiyuan, stated that Dongguan was once known as the “world’s factory” and served as a showcase; therefore, any stagnation in China’s consumer market inevitably reflects in Dongguan. Hu Xijin’s encouragement of adult consumption and the adult industry highlights China’s current consumption issues.
“A normally progressing country would not resort to such extreme measures. Encouraging this specific industry amid shrinking consumption indicates the fading importance of ordinary, conventional consumption patterns; the primary consumption focus has disappeared!” stated Fan.
In 2014, the CCP conducted a massive crackdown on “vice, gambling, and drug-related activities” in Dongguan, resulting in the rectification of over 2,000 entertainment venues and a significant decline in the adult industry. The issues related to public security, hidden dangers, and the pros and cons of the entertainment economy were extensive and complex, leading to polarized opinions.
Veteran commentator residing in the US, Tang Jingyuan, told Dajiyuan that Dongguan’s large-scale anti-vice campaign was prompted by the severe social issues caused by the booming adult entertainment industry, including concerns about public security and substantial impacts on society and families.
“At that time, Dongguan’s basic social functions and operations were severely affected. It even jeopardized the city’s business environment. With the infiltration of criminal elements into the adult industry, various illicit activities such as gambling, organized prostitution, money laundering, illegal operations, drug trafficking emerged, turning Dongguan into a hub of ‘black economy.'”
Tang Jingyuan believes the fundamental reason behind Dongguan’s declining consumption, unfavorable economic development, lies in significant mistakes made by the CCP in its economic policies. However, the Dongguan local government, including shameless figures like Hu Xijin, openly promoting the adult industry as a means to boost the local economy and consumption, signifies a disastrous act, only offering a temporary fix.
Located in the eastern part of the Pearl River Delta, Dongguan is a typical export-oriented city in China, with a historic dependence on foreign trade that once reached 300%. Leveraging advantages such as low labor costs and land prices, the city experienced rapid economic growth, earning the title of the “world’s factory.” Between 2009 and 2019, the annual GDP growth rate was around 8%, peaking at 10.2% in 2009.
Amid supply chain relocations, Taiwanese and foreign investments have significantly retreated, leaving the streets filled with unemployed populations, with reports indicating that 4 million people have left the city. The GDP growth rate was 2.6% in 2023, a disappointing figure. In 2024, the GDP growth rate picked up to 4.6%, still below China’s overall economic growth rate of 5% in 2024.
Under the backdrop of the US-China trade war, can Dongguan revive its past prosperity and make a comeback?
Fan Jiazhong asserts that Dongguan’s consumption downturn is a reaction to the overall environment, with the problems of insufficient consumption expected to persist for a long time – as described by Japanese economist Gu Chao Ming, this is a typical balance sheet recession.
At a recent symposium, Gu Chao Ming, Chief Economist at Nomura Research Institute in Japan, mentioned, “It seems that the Chinese government does not want to address the fact that China has entered a phase of balance sheet recession. From the central government, the central bank to local authorities, the (deficit) on China’s overall balance sheet exceeds 7% of GDP, which is a significant figure.”
Fan explains that the hallmark of a balance sheet recession is that everyone reduces their balance sheet, including ordinary households, enterprises, and possibly even governments. To reduce the balance sheet, debts must be repaid, leading to sacrifices in terms of consumption. Hence, people tend to refrain from consuming as much.
“When consumption decreases, we see the current situation of stagnation, including in Dongguan.”
Tang Jingyuan believes that after decades of economic reforms and opening up, China’s private capital has posed a severe threat to the CCP’s regime. Xi Jinping, thus, has prioritized “political security,” resorting to legal and even violent measures to suppress and seize assets of private businesses, deterring many foreign players from engaging with China.
“The significant decline in Dongguan’s manufacturing sector is not a natural disaster but a man-made catastrophe – a result of the inevitable consequences of the CCP’s system,” Tang Jingyuan concluded.
In this context, Tang highlights that Dongguan epitomizes the entire Chinese economy. Given the current economic predicament in Dongguan, it’s evident that there are no rational solutions available for its economic troubles as the economic prospects for the entire China remain bleak.