Impacts of Regional and Global Financial Crises on Employment Cycles and Industrial Structures: A Case Study of Cities in the Pearl River Delta

Using the Pearl River Delta in China as a case study, we found the Asian financial crisis in 1997 had more significant impacts on service sectors, whereas the 2008 global financial crisis exerted more influence on export-oriented manufacturing industries. Before the 2008 crisis, cities had been synchronising in manufacturing expansion. After the crisis, manufacturing expansion became unsynchronised, whereas service industries started to keep growing at relatively high and stable growth rates. In addition to expansion phases which are common in China, we found contraction phases of the employment cycles which were caused by the financial crises. Although most cities in the area took off with labour-intensive manufacturing at the beginning of the economic reform, the industrial structures of the area have evolved into an integrated industrial network through industrial specialisation, functional diversity and collaboration. This change is principally due to self-motivated, crisis-motivated and government-motivated industry restructuring. One characteristic of this industrial network is the complementary relationship between the central city and its surrounding areas. The former provides modern service industries for the latter. A panel model regression confirms that tertiary industries, especially high-tech and high-earning sectors, have significantly positive effects on economic growth after the global crisis.