From World’s Factory to Economic Ruins: The End of a Global Superpower?

It's all covered in today's China Truths. I must emphasize this again to everyone. This so-called trade war is, in essence, a real war. And what is the nature of war? It's that ordinary people will always suffer, no matter who wins or loses. You are the price that's paid. In the phrase, at all costs, you are that cost. That's the basic idea. Do you understand? That's always the fate of regular people. Oh no, things are a mess now. We've been hit squarely by this trade war. The factories have completely lost morale. Look, goods are piling up here, everything's come to a halt. It's not just that we can't sell to the US, but now we can't sell to other countries either. The only option left is domestic sales, but even the leftover materials can't be cleared. What can we do now? We're totally stuck. Look at the containers at the port, stacked up like mountains, not a single truck in sight. In this trade war, has your industry been affected? It's over. It's over. There's no work left to do. This year, export factories are really having a tough time. Starting today, we're taking time off. I heard there are no orders at all right now. When we asked the boss, they said at least a three-month break. What do we do now? Are we supposed to eat dirt for the next three months? We've got elderly parents to care for and young children to raise. The biggest loser in this tariff war may very well be the world's factory, Dongguan. There are over 14,000 sizable businesses here, and 60% rely on exports. Now, with orders dropping sharply, life has become truly difficult. A few days ago, I visited an old customer, a Taiwanese company. Normally, they only close for one day during the Qingming Festival, but this year they extended it to five full days. What's the worst part? These big factories, just to survive, have turned to the domestic market and are now competing with smaller local factories, turning the whole industry into a brutal battlefield, a fight to the death. Even though I support the government's countermeasures, I just can't stay silent when I see people shouting online at all costs. I want to push back and say, stop shouting already. You might be the one paying that cost. The U.S.-China tariff war has dealt a massive blow to China's manufacturing industry. Many factories have lost orders, inventory can't be sold, production has been halted, workers are returning to their hometowns, and traders as well as cross-border e-commerce companies are now facing an existential crisis. Ma Linhai, chairman of a garment company in Shenzhen, openly declared at the port that they would shift from exporting to domestic sales, live-streaming to sell-off inventory at discounts of up to 80%, leaving prices at just 20% of the original. People kept telling us today, stop the live-stream, come back tomorrow. But by then, there might not be anything left. These are all high-quality export goods. We might have to stop live-streaming at any moment. One container can hold over 30,000 garments, and right now our containers are burdened with a massive stockpile of unsold goods. Shipping them out only means losing money. So now we're trying to make a decisive call. Clear everything out. Doing foreign trade now feels like the sky has fallen. Workers are being forced to stop working. And once again, it's the people at the bottom who suffer most. On the other side, physical stores have closed down and aren't selling anything either. There's a batch of linen pants. If anyone doesn't mind, just take them and wear them. The quality is excellent. All were export orders for major global brands. Only three days, everything is being cleared out for just a few dozen yuan. Lately, in the Pearl River Delta and the Greater Bay Area, many workers have gone back to their hometowns. Export goods bound for the U.S. are piling up at China's major ports, stacked into mountains. Online, countless videos show the grim reality faced by Chinese businesses and workers. Factories on the verge of shutting down. Workers being laid off and forced to go home. One netizen, currently working in a factory, shared, It really feels like the financial crisis has arrived. All the orders in the workshop have been cancelled, and we're taking turns working and resting. If this keeps going, I guess we'll have to survive by drinking the northwest wind. The sky is about to fall, everyone. I heard that, after May. More than half of the factories will have to shut down for an extended period. Is this news reliable? Does anyone have any inside information to share? It seems like many long-term employees are being called in by management and told to finish up this month and then take leave. This year, every factory is struggling more than the next. How's your factory doing? Got any orders? This year, many factories hire people and then let them go again on and off, much more than in previous years. True or not, we'll find out after the May 1st holiday when we see who comes back. A lot of people slipped away today. Even after calling three ride-hailing cars, we still couldn't fit everyone. It's just too hard. See that? They called cars and ran off already. If you still have a job, hold on to it. Don't go running around blindly. Look at that. Even after booking three cars, they still escaped. Brothers over 50, please stop going out to look for work. I mean it. Really don't. Look how many people showed up at the factory today. The paper box factory only needed 20 people, but nearly 100 showed up. That should tell you clearly what the situation is like in Guangdong right now. So if you're older, don't waste time going around job hunting. The economic environment is truly bad now. If you're already getting on in years, I sincerely advise you to stay in your hometown and find something local. Don't go out and waste effort for nothing. Brother Doong here is just telling it like it is. I don't want you wasting money on travel and time for nothing. Got it? The current situation in Foshan, you might not even believe it if I told you. Large companies are laying off workers and cutting salaries. Smaller ones, especially OEM garment factories, are having an even tougher time. Even the owners are barely hanging on. Many companies still haven't paid last month's wages. Along the streets, lots of shops are putting up signs saying for rent or looking to transfer. Right now in Foshan, people who are actually making money are extremely rare. Most regular office workers are living off debt, working like crazy but barely saving anything, while dealing with monthly loan repayments. Especially those who bought homes at peak prices a few years ago, they're suffering even more now, working nonstop just to pay off their mortgages. If we want to say it nicely, it's reduced spending. But to be real, people just don't have money left. Young people in Foshan, forget about saving, just not being in debt is already a huge achievement. That's the reality for the younger generation here. A woman who had long collaborated with a domestic logistics company revealed to foreign media that, to her knowledge, many factories currently have no orders because foreign-invested companies have stopped placing them. If this situation continues, the domestic economy will undoubtedly face difficulties, and people will be left without jobs. Right now, all we can do is take it as it comes. If tariffs are lifted, ocean freight rates might drop immediately. But if prices keep rising, small logistics companies likely won't survive. It's really tough now. There are simply no jobs left in Guangzhou. Truly, there's nothing to do. Every day, large numbers of people are returning at the transit station, all preparing to head back to the countryside to farm. It's time to return home. More and more people are going back to their hometowns now, and the transit stations are filled with people waiting for rides. This year, garment processing rates in Guangzhou are especially low, so many people have chosen to go home and start their own small businesses. Honestly, going back home isn't a bad idea. It helps boost the local GDP and allows people to take care of their elderly and children. Here's something painful to admit. Currently, 70% of business owners in Shenzhen are unable to pay their employees' salaries. It sounds unbelievable, but it's true. Big companies are all looking for ways to cut wages and lay off staff. As for small businesses, there's no need to even mention them. Many don't even know if they'll survive this season. Look around. Commercial office buildings in Shenzhen are constantly changing tenants. It feels like there's a new wave every month. I talk to business owners from different industries every day, and nearly all of them are buried under online loans and microcredit debt. You can imagine how hard real-life business has become. But who wants to be drowning in debt? Every day is just patching things together to keep the business barely alive. I don't even dare to think further. If the business owners are living like this, what about the workers? Will your salary still be paid in full? It feels like I can't hold on any longer. I've been sitting in this spot for a long time, found a quiet corner and just stayed there. The tuition for our two kids, food, clothing, household expenses. My husband currently has no income and even has to ask me for money. But I'm still in vocational training and also have no income. On top of that, my husband still has to pay two types of insurance. It all just feels incredibly difficult. I don't know what to do anymore. Why does life keep getting harder? When I was little, I used to tell my mom, Mom, when I grow up, I'll earn money to buy you all sorts of things. She just laughed and said, You think making money is that easy? I didn't take it seriously back then. But now that I'm grown up, I've realized making money is really not easy at all. So where is all the money going? I honestly don't even know how much longer I can keep going. A young woman surnamed Huang, who works in foreign trade, shared, The unemployment rate in China is already very high, with many estimating it to be over 30 to 40 percent. Now, with high tariffs, everyone is groaning under the pressure. People in foreign trade have higher skills and more specialized experience than those in domestic business because they've handled a lot of high-quality export orders. But after losing their jobs, they're now forced to compete with domestic workers for employment. For just one position, there are countless applicants. The competition is brutal and downright miserable. Ms. Huang added, Unemployment among university graduates has long been a serious issue. So many students want to get into foreign trade. But even people with years of experience in supply chains can't keep their jobs anymore. So what hope do the students have? In July and August, another 10 million-plus graduates will hit the job market. With today's unemployment rates, Xi Jinping really is the supreme accelerator, accelerating everything, even the crisis. Due to the CCP's retaliatory measures, the United States has raised tariffs on China to 245 percent. What is the impact on Chinese enterprises? Our reporter interviewed private business owners in many places. Shenzhen's import and export scale last year was 4.5 trillion yuan, ranking first among China's foreign trade cities. Mr. An, a second-hand car owner in Shenzhen, revealed that the local area is now affected by the tariff war. It is very serious. All industries are depressed and people are living in poverty. Reporter, have many factories closed down? Mr. An, not only factories but also sales, catering, factories, production, processing, service industries, massage parlors, pharmaceuticals and business, etc. All industries are depressed. The import and export scale of Zhejiang province exceeded 5 trillion yuan for the first time last year. Among them, Yiwu is known as the global trade hub for small commodities. Local factory owners said that the impact of the tariff war is very large. Mr. Fan, the boss of a Yiwu factory. Our Yiwu, Zhejiang, basically has no orders, no foreign trade orders. The impact is very big. Those who are engaged in foreign trade are affected too much and all have to close down. Those who are not exporting are definitely affected too. They are also affected. Last year, the total import and export value of Yiwu city was 668.93 billion yuan, of which nearly 90% were exports. The United States has always been one of the core markets for Yiwu's exports. The orders from the United States for Christmas products, daily necessities, textiles, etc. are large in volume and stable in cycle, which is the basis for the survival of Yiwu enterprises. Mr. Fan, our foreign trade in Yiwu, Zhejiang has basically stopped now, because it is all exported to the United States. If it is all exported to the United States, it will be directly affected, right? We are the most affected place, plus the place with the greatest impact. The impact is too great. Reporter. Are there more pessimistic or optimistic people in your place? Mr. Fan. Well, there are more pessimistic people, definitely more pessimistic people. Guangdong is also a major foreign trade province, with foreign trade imports and exports of 9.11 trillion yuan last year. The local factory owner said that the tariff war has made the business environment more and more inward-looking. Mr. Li, the owner of the aluminum door and window factory in Foshan, Guangdong. Those factories that used to do exports are now consuming domestically, and fighting price wars in China. The current tariffs are so severe that there is no reason to sit and wait for those workers to take a holiday, right? I estimate that if the tariffs are not changed in the second half of this year, the internal consumption will definitely be particularly serious. This is a year of big reshuffles this year. Pindu City, Qingdao, Shandong Province is the world's largest producer of beauty eyelashes. The involution caused by the tariff war has caused some businesses to stop working. Zhao Sang, the owner of a beauty eyelash factory in Pindu City. Recently, it has been particularly curled. The domestic market is too curled. Now it is particularly worrying. You said that the factory has invested 1 or 2 million. Now there is no benefit. It has been in a state of suspension for the past week. Before the tariff war broke out, China's economy had already fallen into a serious recession. Real estate industry giants broke their capital chains and defaulted on their debts, leading to a financial crisis. In 2022, several village banks in Henan and Anhui suddenly stopped depositors from withdrawing money. Wang Peng, a private enterprise owner in Guangdong, is one of the victims. The tariff war has made things worse for them. Wang Peng, a private enterprise owner in Guangdong. The deposits of our depositors in village banks in Henan and Anhui have been illegally frozen. We have no way to consume, let alone invest. We can only rely on constantly pulling such export orders to sell to developed countries such as the United States, Europe, and Japan. However, due to the impact of the tariff trade war, many private enterprises have no way to operate such orders, because after all, our products are mainly sold to Europe and the United States. The CCP claims that the confidence to hardline with the United States is the huge domestic demand market, multiple trading partners, and so-called institutional advantages. However, for private enterprises that mainly rely on exports, these are just empty slogans. Wang Peng. If the trade war continues, it will be a huge blow to our private enterprises, because we have to sell what we produce, but who should we sell it to? Only developed countries and rich countries will buy things. For example, in poor places like Africa, even if we produce, they can't afford it. If exports are converted to domestic sales, its retail price will also face a sharp drop, and then the company will not be able to operate. You also know that domestic consumption is now in arrears. Many companies are laying off employees, including civil servants, salaries. Without money, where will consumption come from? So, consumption has collapsed. Wang Peng said that the trade war has just begun, and more countries will have to stand between China and the United States in the future, and most countries choose to negotiate with the United States instead of fighting hard. Now consumption and investment in the troika have collapsed. If exports are cut off again, it will be a disaster for private enterprises. Tariff war begins. Freight forwarding and logistics industry faces a wave of closures. Under the impact of the tariff war, a large number of freighters on the China-U.S. route have stopped sailing. A Chinese freight forwarder revealed that after the U.S. tariff increase, logistics costs soared, shipments plummeted, and freight forwarding and logistics companies faced a wave of closures. Half a month after the U.S.-China tariff war began, the U.S. tariff on Chinese goods rose to 245 percent, with only some products exempted. The boss of an Yiwu freight forwarding company revealed that the tariff war has just begun, and due to the uncertainty of tariffs, the shipment volume has dropped sharply. In the past, payment was made upon arrival at the port, fearing that customers would abandon the goods and cause losses. Small freight forwarding companies now pay first, and then ship. If tariffs are added during transportation, customers have to pay taxes from time to time. If tariffs fall, they will be refunded during customs clearance. At present, these freight forwarding companies have all stopped. Wang Dong, the boss of an Yiwu freight forwarding company, we used to have 80 containers every week, but now we have less than 40, which are not full. Yiwu's shipment volume has dropped by at least 70 percent. Now more than 20,000 logistics companies in Yiwu are expected to close down by half. Last week, all the small logistics companies that cooperated with us stopped working. Freight forwarding companies revealed that they now use the method of consolidating containers to mix high-tariff and low-tariff goods, reduce the value of goods, avoid taxes, and save logistics costs. Li Ting, an employee of a Shenzhen freight forwarding company, we mainly use USC Freight. As for freight, if the tariff increases, we will increase it. This industry is getting more and more competitive. The tax of about 2,000 yuan for a container is already very high. Now the tariff for a container is tens of thousands of yuan, accounting for 80 percent of the total logistics cost. It is understood that many freight forwarding companies in China have closed down, and their employees have lost their jobs. Yang Rui, an employee of a freight forwarding company in Guangzhou. There is a lot of goods in the U.S. market, but the situation is not good recently. The tariffs have increased, so I have to pay more. Everything has stopped. I have given up everything and went home to farm. Mr. Zhang, an executive of a Chinese e-commerce platform, revealed that trade with the U.S. has basically stopped, but some manufacturers have supply contracts with U.S. customers that must be fulfilled and are still shipping. Mr. Zhang, an executive of a Chinese e-commerce platform. The tariffs will last at least half a year. If there are many U.S. customers, the impact will be great. Large orders will stop, but small orders are still being made. Trading companies can't do U.S. lines at all. They can only change markets. For factories, some will lose money, and the average loss for one container is about tens of thousands of yuan. If they produce dozens or hundreds of orders a year, they will lose a lot of money. 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