Lin Min

THE growing possibility of a full-blown U.S. recession and the weakening dollar were posing a challenge to Shenzhen’s economic growth this year, Mayor Xu Zongheng said in his report to the city’s legislature Thursday.

Shenzhen’s trade firms and manufacturers were scrambling to tackle shrinking overseas orders as the U.S. economy was staggering into a recession, if not already in one, after the subprime crisis caused a credit crunch and dented consumption, according to Xu’s report.

“We might face a more severe world economic situation this year than in the 1997 Asian financial turmoil,” Xu told the city’s legislators. Shenzhen was more susceptible to world economic woes because of its export-oriented economy, the mayor said.

Recent oil, food and raw material price hikes in international markets had remarkably increased the costs for Shenzhen manufacturers, he said.

In his report, Xu lowered the economic growth target in 2008 to 12 percent. Although it was 2.7 percent down from the GDP growth last year, it was still well above the national target. In the government report to the national legislature last month, Premier Wen Jiabao set an 8-percent goal for GDP growth this year, 3.4 percent down from 2007, citing world economic uncertainties and the need to prevent the economy from overheating.