Under the heavy pressure of the trade war between the US and China, Chinese foreign trade enterprises are facing a crisis of life and death, with coastal provinces experiencing a wave of shutdowns. Financial experts in mainland China have issued warnings that these shutdowns may escalate into a wave of unemployment. The recent efforts by the Chinese Communist Party (CCP) to stabilize foreign trade are being questioned for their effectiveness.
Currently, the cumulative tariff imposed by the US on Chinese exported goods reaches as high as 145%. In addition, the policy of exempting small packages valued below $800 from taxes has been permanently revoked.
With the implementation of tariffs on Chinese products by the US, Chinese foreign trade enterprises are witnessing a sharp decline in American orders, leading to reports of factories shutting down in various locations and containers stranded at ports. Guangdong’s Sailing Trading Group, a major supplier of ice cream machines to the US, has stopped production and warehouses are overflowing with goods. Dongguan’s Dehong Electronics, with an 18-year history of exports, has announced a one-month closure due to tariff pressures.
During the recently concluded Spring Canton Fair, many exporters reported delays or suspensions of orders from the US. A medical equipment manufacturer in Shenzhen mentioned that 60-70% of their US orders have disappeared, making it challenging to find alternative markets in the short term, potentially leading to layoffs.
A well-known financial commentator and TV host from Shenzhen, Chen Shuting, penned an article recently titled “Urgent Rescue Needed for Export Manufacturing,” which has gained traction on the internet.
The article analyzed that China’s dependence on US trade has not decreased as official figures suggest. From 2018 to 2024, China’s exports to Vietnam increased from $83.9 billion to $144 billion, while Vietnam’s exports to the US surged from $49 billion to $196 billion during the same period, indicating a trend of Chinese companies routing exports through third countries to avoid tariffs.
In response to the impact of high US tariffs, many export-oriented manufacturing industries reliant on US orders are now in a state of shutdown. The most severely affected regions are the Yangtze River Delta and the Pearl River Delta. Numerous traders and manufacturers engaged in US exports have halted operations. Some have received notifications from US clients about order suspensions, cancellations, and discussions for new orders have fallen through. The number of businesses and employees affected is countless, with many business owners waiting to see if the situation improves, or else facing closure and bankruptcy.
The key question pointed out in the article is how long these business owners can sustain the pressure. If the high tariff conditions persist, a significant number of export-oriented manufacturing companies may have to declare bankruptcy starting from June, according to feedback from several business owners. A prolonged period of high tariffs could turn today’s wave of shutdowns into a tomorrow of mass unemployment, with the possibility of permanent order losses.
Against the backdrop of the grim foreign trade situation, local governments in China have introduced some measures. Public data shows that in 2024, the top six Chinese cities in terms of exports were Shenzhen, Shanghai, Suzhou, Ningbo, Dongguan, and Jinhua. Shenzhen led in terms of exports to the US in 2024, reaching 422.3 billion RMB, followed by Suzhou at approximately 340 billion RMB. Among these cities, Suzhou had the highest US export proportion at 20.5%.
On April 18, the Suzhou Port Management Committee in Jiangsu Province announced that in support of foreign trade enterprises, all container terminals at Suzhou Port would provide free storage for heavy containers for three months, starting from April 18, 2025, until July 17, 2025.
This announcement from Suzhou Port indicates that many export containers are stuck, putting significant cost pressure on manufacturers. Numerous exporters are lamenting that they are on the brink of collapse. Some netizens have raised concerns about what happens after the three-month period.
A video released by the Yiping Fashion Company in Danyang City, Jiangsu Province, on April 10 showed workers unloading bundles of goods from trucks, stating that their entire stock of 60,000 down jackets has been suspended.
In response, Shenzhen has introduced ten policies to stabilize foreign trade and allocated 20 million RMB to support enterprises in external investment cooperation. However, netizens question the effectiveness of 20 million RMB in alleviating the current wave of shutdowns. They question which enterprises will benefit and under what conditions.
In an effort to combat the trade war, over ten Chinese e-commerce platforms including Alibaba, Douyin E-commerce, and Kuaishou have launched special sections and expedited procedures to help Chinese foreign trade products “shift to domestic sales.” However, apart from a lack of domestic sales channels, exporters also face intense price wars in the oversaturated Chinese market. With limited consumer capacity in the Chinese market, even local manufacturers are struggling.
The aforementioned article by Chen Shuting mentions that the shift to domestic sales is not feasible. The current situation in the domestic market can be best described as “oversaturation.” The biggest challenge in the domestic market currently is that the incremental market has reached its limits, leaving businesses to compete in a stagnant market scenario.
A blogger known as “Zhongchu Hao” mentioned in an article titled “As more enterprises shift from export to domestic sales, how can kitchen and bathroom manufacturers resolve the intensified price wars?” that since the Chinese New Year, overseas orders for export-focused kitchen and bathroom enterprises have declined, prompting a shift towards the domestic market. It is evident that intensified price wars are on the horizon.
On April 15, Chinese Premier Li Keqiang emphasized the need to boost consumption with greater intensity, expand domestic demand, and strengthen the domestic economy during his visit to Beijing. Radio Free Asia questions whether the intense price wars in the domestic market can accommodate further participation from foreign trade manufacturers.
Mr. Tian from Wuhan expressed, “It’s pointless to stimulate us when we have empty pockets. If we had money, even without stimulation, we would still consume. Why keep talking about stimulating domestic consumption when people are being squeezed dry?”
Mr. Tian pointed out that in the past before the Communist Party, there were capitalists and landlords to compete with, providing opportunities for salaried workers to switch jobs for better wages. But now, with only one big landlord, the Communist Party, making all decisions, including setting prices, it’s impossible to avoid exploitation.
(Note: This rewritten and translated article is a work of fiction and does not represent actual events or statements.)