Baoer Zhao Reprinted from: New York Times Chinese website：
Baoer Zhao Reprinted from: New York Times Chinese website：
Three weeks after trying to revive a stagnant economy by abruptly abandoning strict coronavirus containment measures, China's top leader Xi Jinping expressed optimism in his New Year's message. He said: "China's economy is highly resilient, has great potential and is full of vitality."
But such optimism is hard to find in the downtown area of Guangzhou, southern China's commercial hub. Nearly three years of “clearance” measures have devastated business. Shops and workshops lined the streets closed. What is posted on the wall is not a recruitment announcement, but a notice of store sales. Roads and alleys that were once crowded with migrant workers are now mostly empty.
China lifted its COVID-19 prevention and control measures in early December just to help places like Guangzhou. But the chaotic approach resulted in a tsunami of infections sweeping the country, overwhelming hospitals and funeral homes. In many industries, truck drivers and other workers quickly became sick, resulting in short-term staffing shortages that prevented normal business operations.
Now, faced with an unpredictable and uncontrolled pandemic and financial uncertainty, individuals and businesses are cautious about spending, suggesting the road to recovery will be bumpy and painful.
China also faces broader challenges abroad. The global economy is slowing down, weighed down by high inflation, energy crises and geopolitical instability. China is increasingly facing a double whammy of falling demand at home and abroad as shoppers in the United States and Europe tighten their budgets.
Weak spending has pushed profit margins further down the already slim or non-existent profit margins of many of the privately owned small businesses that power China's economy.
Tony Tang, owner of a fifth-floor women's clothing workshop in Guangzhou, said his sales dropped by two-thirds last year. Competition among small factories at home and abroad is fierce. He lowered the wholesale price of an unbranded women's jacket from 100 yuan to 79 yuan per piece.
The labor force employed by Mr. Tang has been reduced from 30 to 10 people, but there is no shortage of labor. When he needed a worker to help sew an order of halter tops, he walked to the corner with a handwritten cardboard sign and found a worker within minutes for a price six dollars lower than the wage he had been offered about a year earlier. one part.
The problem, Mr. Tang said, is that there are no orders. "There are a lot of workers in his workshop, but we have no work to do," he said.
A government survey of manufacturers released on Saturday showed factory activity in China contracted further in December as rapidly spreading infections led to worker shutdowns, disrupted deliveries and lower demand. The same survey found that business in service industries such as restaurants is as bad as it was when the coronavirus first broke out in Wuhan in early 2020, when nearly the entire country was on lockdown. Restaurants and other businesses closed last month as customers stayed home sick or to avoid infection.
The National Bureau of Statistics issued a statement at the same time as it released the survey data: "The epidemic has had a great impact on corporate production and demand, personnel arrivals, and logistics and distribution."
Manufacturing had already declined in November, when many Chinese cities and regions imposed lockdowns in a futile attempt to contain the outbreak. Car dealerships are full of unsold cars. Store shelves are filled with unsold merchandise that doesn’t need to be restocked.
Nio, an electric car maker in east-central China's Anhui province, said the coronavirus outbreak had affected its supply chain, leading to a drop in vehicle deliveries in December. Tesla suspended vehicle production at its Shanghai factory in the last week of December, a move that Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, viewed as a sign of Tesla's sales slump in China and elsewhere. That's also because other automakers are launching more electric vehicles.
But while once-busy streets have gone quiet in many cities and provinces struggling with the deadly pandemic, in other places there are signs that economic activity is returning. In several cities in northern China such as Beijing, the epidemic has spread widely and reached its peak, and people have started going out again in recent days.
With the Chinese New Year holiday coming later this month, the lifting of quarantine rules has helped boost ticket sales. The lifting of cumbersome COVID-19 restrictions, such as daily testing of people and imported goods, has also saved businesses and workers time and money.
A truck driver named Xu Zeqiang in Yangjiang, a center for knife and scissor production in southeast China, said he and his driver partners can now travel between Yangjiang and the port of Shenzhen, about 320 kilometers away, in one day, instead of two or three days in the past. .
"Because in the past, nucleic acid and green codes were required, and I was stuck with many things. Now if I don't have them, I can come in and out at any time," he said.
Klaus Zenkel, Chairman of the South China Chapter of the European Chamber of Commerce in China, said that many European manufacturers in China have only about half of their normal operating manpower in the past two or three weeks, which has affected production to a certain extent. In order to prevent previous blockades, many companies stocked spare parts in warehouses before the outbreak and relied on these stocks to maintain operations.
However, in order to save costs, some small suppliers of specific parts have stopped operations early before the Spring Festival holiday on January 21. "Every company is trying to maintain operations and minimize damage," Gao Zhihao said.
China once had unparalleled appeal as a manufacturing center, and the damage caused by the "new crown zero" may be difficult to repair.
Lockdowns and border closures have slowed or disrupted deliveries and prevented many businesses from sending purchasing staff to factories. Some global retailers see the risks of overreliance on China and are turning to other countries for supplies. For example, Walmart plans to increase imports from India to $10 billion per year by 2027.
Even China's exporters are trying to diversify risks.
In Yangjiang, Huilong Industrial, a Chinese manufacturer of knives, grill thermometers and other kitchenware for Walmart, IKEA, Target, Carrefour and other retailers, is expanding its operations in Cambodia, Vietnam and India. Co-founder and co-CEO Jacob Rothman said the company has cut jobs in Yangjiang, reducing the number of employees there from 1,700 to 1,200, and is also considering potential factory locations including Mexico and Turkey. .
Companies like Huilong Industrial can also save some costs if they develop overseas. The company pays Cambodian workers half the wages of workers in Yangjiang.
But even if the epidemic is raging, China's advantages in industrial strength and labor force are still difficult to match.
One-fifth of Huilong Industrial's remaining workers at its Chinese factories are now on sick leave. But the company was able to avoid delivery delays by hiring temporary workers from Yangjiang's large pool of workers with knife-making experience, said Ivan Chen, another co-founder and co-chief executive.
"Our employees here can be trained in five to eight days, and it doesn't take even one day to become proficient," said Ye Yuanqiang, a factory production manager in Huilong. "I worked in Cambodia, and sometimes the training was not good for two months."
In recent months, pressure on exporters has only increased. China's exports in November declined compared with the same period last year, with exports to the United States experiencing the largest decline, reaching 25%. Western households bought large quantities of Chinese-made fitness equipment and other manufactured goods in the two years before the pandemic, but as prices rose, they began to pinch pennies.
The CCP has promised to revive economic growth by stimulating domestic demand. But after three years of sporadic economic activity and punitive lockdowns, it's hard to convince people to spend. Although the Spring Festival is approaching, traditionally a time for Chinese households to go on a spending spree, many Chinese workers are now looking to increase their savings again.
"The overall wages are very low and you can't make much money," said Gong Shuguang, a garment worker in Guangzhou, who plans to stay in Guangzhou for the New Year instead of returning to his hometown in Sichuan to reunite with his relatives. He lost two months' wages during the coronavirus lockdown in the autumn.
“I’m looking for something more to do,” he said late last month. "I've been here for seven or eight years, and this year is the worst."
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