BEIJING (AFP)--Nearly half of China's toy makers closed last year due to shrinking exports caused by the global financial crisis, Chinese media reported Monday.

At the start of 2008, China had 8,610 companies that produced and exported toys, but by the end of the year, that number had declined by 49% to 4,388, the Beijing Times said, citing customs data.

Chinese toy exports grew marginally in 2008 by 1.8% to $8.6 billion dollars, but the overall figure masked a dramatically worsening performance toward the end of the year, according to the paper.

In November, toy exports declined by 8.6% from the same month a year earlier, while December marked a drop of 7.6%, the paper said.

China's southern province of Guangdong, which produces roughly half of the world's toys, has seen some large-scale factory closures.

Smart Union Group Holdings (2700.HK), a Hong Kong-listed maker of products for U.S. giants Mattel Inc. (MAT) and Walt Disney Co. (DIS), shut down in October last year, causing 7,000 people to lose their jobs.

China's toy industry had already been facing problems before the economic crisis struck.

Recalls around the world of dangerous China-made toys severely tarnished the industry's reputation, while rising labor and land costs also caused problems.

Adding to the woes, India banned Chinese toy imports in late January for six months, triggering trade tensions between the world's two biggest emerging economies.

In reaction, Chinese officials are now deciding whether they should appeal to the World Trade Organization Dispute Settlement Body, state media said last week.

Overall, China's exports have also been hit hard by the crisis, with shipments abroad declining for the first time in seven years in November and December.