Factories Shut, China Workers Are Suffering

For decades, the steamy Pearl River Delta area of southern Guangdong Province served as a primary engine for China’s astounding economic growth. But circumstances have changed quickly. The slowdown in exports contributed to the closing of at least 67,000 factories across China in the first half of the year, according to government statistics. Labor disputes and protests over lost back wages have surged, igniting fear in local officials. The shutdown of the Weixu shoe factory, called China Top Industries in English, is the latest casualty, the New York Times reported today. The collapse of the factory started a domino effect: Related businesses, like a smaller factory that put labels on Weixu’s shoe boxes, have also failed. Hundreds of additional laborers have lost their jobs, and more than 200 creditors have yet to collect millions of dollars. “There’s very serious damage being done down there, I don’t deny it, and I think it’ll get worse because we haven’t seen the full impact of the economic downturn in Europe,” said Arthur Kroeber, managing director of Dragonomics, an economic research and advisory firm based in Beijing. “I think next year we might see export growth in the country as a whole go down to 0 percent.” Prime Minister Wen Jiabao is pushing for policies that will increase domestic consumer consumption to wean China off its reliance on exports. Last Sunday, the government unveiled a stimulus package worth $586 billion over the next two years--the largest ever announced in China--to help create jobs, mostly by building new transportation infrastructure. Read more.