China’s economy has been struggling, with tight job markets, decreased consumer willingness, and a continued shrinkage in the manufacturing sector. Industries like textiles and electronics, which rely on low-skilled labor, are facing difficulties, leaving both businesses and workers in dire straits. People in Guangdong are warning that the manufacturing sector is facing a crisis.
Recently, netizens in China have identified three abnormal phenomena on social media. First, many job seekers in Guangzhou and Shenzhen are turning to driving for ride-hailing services or delivering packages due to intense competition for traditional jobs. Second, some businesses in Beijing are not collecting rent from tenants, only requiring payment of utilities on time. Third, many white-collar workers in Shanghai are now bringing their own lunches.
Netizens have expressed astonishment at these unusual occurrences, pointing to the troubling challenges that China’s economy is currently facing.
In recent days, a blogger in Hunan known as “Scholar Yanqing” stated that the exploitation of ordinary people in Chinese society has reached alarming levels. According to her, the number of taxi drivers and delivery workers in the country has reached close to a billion.
On August 7, the General Administration of Customs of the Communist Party of China released data showing that China’s export growth rate in July was the lowest in three months, below expectations. This has further heightened concerns about the future outlook of the world’s second-largest economy’s vast manufacturing sector.
On July 31, the latest Purchasing Managers’ Index (PMI) released by the National Bureau of Statistics of the Communist Party of China fell from 49.5 in June to 49.4 in July, marking a third consecutive monthly decline, reflecting a gradual contraction in manufacturing activities in China.
In recent years, many long-standing electrical appliance companies in Guangdong and Shenzhen have declared bankruptcy, with scenes of workers queuing up for compensation payments evoking sorrow and lamentation.
A media personality in Guangdong named “Enthusiastic Orange tUr” noted that Shenzhen, once known as the world’s factory, is undergoing significant changes quietly. People on the streets no longer discuss which electronics company is hiring, but rather which factory is closing down again.
She recalled ten years ago when she and friends from her village went to Shenzhen to find work. The factory entrances were always crowded with people eager to get in. However, the once bustling factory floors now sit empty, with the busy assembly lines falling silent. What used to be golden opportunities have now become liabilities. Factories that used to earn billions annually are now cutting back expenses.
“Enthusiastic Orange tUr” mentioned that competition within the industry has become fiercer. Every company is fighting for limited orders. Price wars have reached a fever pitch, with profits dwindling to record lows. In this battle, smaller and poorly-managed enterprises are being eliminated in this silent war without gunfire.
A blogger from Guangdong known as “Brother Big Ginger Watermelon” stated that many believed they had survived the challenges of the past three to four years only to face a more severe situation now. It’s like being caught between a rock and a hard place, endangering the survival of the manufacturing sector.
Guangdong’s Dongguan, known as the “world’s factory,” has seen a precipitous decline in business orders since easing pandemic controls.
On social media platforms like Douyin, many netizens are sharing statistics indicating that over 3500 companies in Dongguan closed in 2023, including 2050 manufacturing companies, 1000 contract manufacturers, and 500 small private enterprises.
The loss or closure of manufacturing businesses not only severely impacts China’s economy but also poses a significant threat to social stability. A report by the Hong Kong-based non-governmental organization China Labour Bulletin (CLB), dedicated to promoting and protecting the rights of Chinese workers, revealed 757 labor rights and strike cases in the first half of this year, higher than the 696 cases reported in the same period last year. Construction accounted for the most significant share, at 47.8%, followed by manufacturing at 32.4%, totaling 233 cases, up from 197 cases in the same period last year.
In May this year, a leather goods company with over twenty years of history, Nuo De Leather Goods, shut down, but workers did not receive their wages, leading to a collective protest outside the factory where hundreds gathered demanding payment. They mentioned that the factory closed without paying salaries for January.
With the boss missing, workers owed wages could only wait at the factory premises.
In online comments, some netizens noted that Nuo De had not compensated its employees economically before closing down, with some suggesting that the boss fled. Workers shared TikTok videos revealing the factory’s closure and their six-month unpaid wages.
Data shows that as early as April 30, 2024, Nuo De workers had sought help on the Guangdong Provincial Federation of Trade Unions website, stating that Nuo De Leather Goods Co., Ltd. in Dongguan owed social security payments for one year and salaries for four months, forcing many workers to resign. A week later, Nuo De Leather Goods factory declared bankruptcy, the boss reportedly absconded, and workers were left without pay, gathering in front of the factory for their dues.
Zhou Aidan, a researcher at China Labour Bulletin, told Voice of America that the shrinking manufacturing sector leading to worker protests and strikes is a culmination of issues that have been brewing for some time.
Zhou explained, “The main reason is the reduction in export orders, leading to wage arrears or factory closures. Usually, these events do not happen overnight but are the result of several months of non-payment or a decrease in factory orders, resulting in reduced workload. Basically, manufacturing workers cannot survive on basic wages alone; their minimum wage is only around 2,000 RMB. If working hours are reduced, many workers will consider leaving themselves, and many factories force workers to leave in this way, leading workers to determine to protest and strike.”
Looking ahead, Zhou Aidan believes that wage arrears or factory closures will continue.
On June 7, Zhejiang Aixin New Energy Group, collaborating with international giants like Panasonic and Toyota, suddenly announced the cessation of production at multiple branches in Zhejiang, Jiangxi, and Jiangsu, requiring employees to take 2 to 3 months of leave.
During the first month of suspension, workers would receive their base salary and allowances, but starting from the second month, they would only obtain 70% of the local minimum wage standard, approximately 600 RMB for one worker. Additionally, they would have to pay for social security, housing provident fund, personal income tax, dormitory utilities, making it impossible for them to sustain their monthly living expenses. Furthermore, during the break, workers could not apply for unemployment insurance benefits.