The decline of the Chinese city that was considered “the factory of the world”

The decline of the Chinese city that was considered “the factory of the world”
The decline of the Chinese city that was considered “the factory of the world”

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Ren Wenbing is reluctant to leave the brick structure that was once a thriving factory in the manufacturing hub of Dongguan, southern China.

“All the workers are amazed,” says the 54-year-old, pointing to the place where furniture was assembled and everyone gathered for lunch. The owner of the company moved production to Southeast Asian to reduce costs. Ren says he is owed more than $11,000 due to a redundancy payment, a sum that could take years to earn. “We are disappointed and saddened,” he adds, as a machine hits the windows with a sledgehammer.

Ren isn’t just mourning the loss of a furniture company. He also mourns the end of what was once the unstoppable china economy, making it difficult for millions of workers to find employment. For people like him, Now not enough is made in China. But the West accuses the Asian country of doing too much: that was the dominant message during the recent visit of US Treasury Secretary Janet Yellen. She chided Beijing for “unfair economic practices”, for producing more than it needs or than the world can afford to absorb.

Ren Wenbing says he is owed thousands of dollars in severance pay after his former employer moved production out of ChinaBBC

The “Made in China” branding that is embossed, sewn or printed on T-shirts, tables and televisions in so many homes around the world is changing. It is now at the heart of the electric cars that are coming to Germany and the solar panels that power the Europe’s renewable policies. And that worries West.

Rising trade tensions with the United States, strict coronavirus lockdowns and a global recession have led manufacturers who once flocked to Chinese shores to look elsewhere.

Foreign investment in the country is at its lowest level in 30 years. But now that the old industrial pillars of furniture, clothing and electrical products are struggling, Beijing looks towards its “new productive forces”: solar panels, lithium batteries and electric cars.

“We export to United Kingdom, Belgium, Germanymainly to European countries, but also to Africa, Australia, South America, North America and Southeast Asia,” explains salesman Yan Mu while showing the batteries sold by the company he works for.

Theirs is one of the booths at an exhibition held by hundreds of green energy storage companies at a renovated and repurposed steel plant on the outskirts of Beijing.

Debris covers the floor of what was once a thriving furniture factory in DongguanBBC

“I think Chinese companies are leading the whole energy storage market. With innovation, with new technologiesbattery sales, PCS [sistemas de conversión de energía]… Everything’s good. Right now, I think 80% to 90% of energy storage equipment is designed and manufactured in China.”

A few hours by car from Dongguan There are more signs of the scale of this industry: there are solar panels as far as the eye can see. China installed more solar panels in the last year than the United States has managed to build in a decade and mass manufacturing in the Asian country has reduced the cost to half of what it was last year.

Manufacturers across Europe are struggling to compete. In 2023, 97% of the solar panels installed in Europe came from China. But China’s new industries require far less labor than those that once fueled its spectacular growth. They need specialized and highly skilled workers and, increasingly, robots. While youth unemployment has grabbed major headlines, its overall urban unemployment rate still exceeds 5%.

The United States and the European Union believe that this is how China is trying to save its economy: by producing green technology at reduced prices and subsidized by the State to sell it abroad. They say it’s a tactic that is driving down the cost of solar panels and other emerging technologies and driving Western companies out of business.

China says its success is due to innovation, not state subsidiesand there is demand for their exports as countries transition from fossil fuels to more environmentally friendly energy sources.

China is increasingly turning to clean energy products such as solar panels, lithium batteries and electric carsBBC

However, Ren cannot find work in the new Chinese success story. He left his family farm in Henan when he was a teenager and moved to Dongguan, a city in the southern coastal province of Guangzhou, with so many manufacturers that it is known as the “factory of the world”. On one occasion, he did not return to his hometown for 11 years.

Ren is one of the almost 300 million migrant workers who have moved from villages across China to major cities in search of work. Most leave their families behind: Ren’s children are raised by their grandparents while he and his wife live in Dongguan, where three-quarters of the city’s 10 million residents are believed to be migrants.

“My children, of course, miss me”, says. He claims that he and his wife “had no choice.” “We didn’t earn much. After daily living costs, the money we sent home to our parents, the money for our children’s education, we didn’t have much left.”

“All migrant workers face this,” he continues. “If we want to support our elderly and our children, we have to live far from our loved ones and work in other provinces. This is the reality”. Now what China’s future is at a crossroadsso are their lives.

Ren and his wife live in a room that only fits a bed and a side table. That’s where he sits while he checks his phone looking for job offers. Most factories offer less than minimum wage of US$2.50 per hour. One ad offered just $1.8 per hour.

He needs his severance money and went to court to get it. However, the owner appears to have left the country, leaving him and some 300 former colleagues in limbo.

“We witnessed the changes in Dongguan and have strong feelings for this land. This is our second home. We would feel very sad and lost if we had to leave here. We will not forget what the local government did trying to give us more benefits. It is thanks to government policies that they gave us jobs and we were able to earn a living,” he says.

Ren Wenbing says she had “no choice” but to leave her children with her grandparents to earn a living in DongguanBBC

Since the mid-1980s, just after China opened up to the world, Dongguan became the country’s main export and manufacturing base. produced cheap clothes, toys and shoes. Back then, tens of thousands of workers would have lined up at the doors to begin their shift making shoes for export to USA.

But in more recent years, workers began demanding higher wages, while companies cut prices to win contracts, further decreasing profits.

Then, donald trump came to the White House and imposed tariffs on Chinese products, including shoes. So, to lower costs and protect themselves from the trade wars between the United States and China, companies began to look to establish themselves elsewhere. Now, in a nearly abandoned neighborhood of Dongguan, there are miles of empty low-rise buildings that look like ghost factories. The only inhabitant is a lone security guard who keeps curious people away.

The constant hum of sewing machines has been replaced by a chorus of bird songs and the stubborn roots of banyan trees, which have forced their way under the concrete skeletons of the buildings. The warm and often humid climate of the south helps nature take over what man left behind.

Rows of abandoned buildings, former clothing and shoe factories, sit empty in this Dongguan neighborhoodBBC

However, Dongguan is not giving up: it is trying to transform itself into a high technology center to restore some of its former glory. On the shores of Lake Songshan, tech giant Huawei has been building a campus to house 25,000 employees. There is a new science park and a series of hotels.

Alan Lee sleeps in his freshly painted office while trying to take advantage of the city’s new direction. This 32-year-old man, who survived the economic crisis to start his business, set his goal of exporting high-tech machinery to Europe.

Dongguan tries to transform into a high-tech hub, including building a Huawei campus for 25,000 employeesBBC

“Many people have lost their jobs in recent years. People fell into debt and were forced to sell their properties. We see that many companies suffer from a decrease in export demand. Managers face a lot of financial pressure and even have to close their factories. “We chose to focus on trade so as not to have pressure on production,” he notes.

But these jobs require knowledge of new technological skills that people like Ren have not yet acquired. His hopes of receiving the money he is owed are fading. He thinks about what he will tell his children about why their father stayed away.

“I don’t know how to give a good answer. I could simply say: your mother and I are away because we want to give you a better life and a better education. We hope they can learn things so that in the future they don’t need to work as hard as we do,” she notes.

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