Trade war with US triggers wave of factory ‘holidays’ in China’s export hubs

[ad_1] Because the U.S.-China commerce struggle heats up, companies in main export hubs in southeastern China are asserting manufacturing facility “holidays” – halting manufacturing and slashing worker wages and work hours – whereas turning to social commerce platforms to promote stockpiled items, as they grapple with a pointy drop in abroad orders.

It’s a phenomenon sweeping throughout China’s export-driven provinces like Zhejiang, Guangdong, and Jiangsu, the place producers – weighed down by a big backlog of unsold merchandise – are issuing a flurry of “vacation notices” to announce they're suspending operations at factories.

Video: Commerce struggle with US triggers wave of manufacturing facility “holidays” in China’s export hubs To clear massive piles of stock, corporations at the moment are resorting to promoting the leftover export items by means of social commerce platforms, reminiscent of TikTok and Taobao, at closely marked-down charges.

Merchandise starting from yoga pants and footwear to residence home equipment and blankets — initially meant to be exported to the U.S. — at the moment are being offered on-line by Chinese language export corporations or their staff at discount costs, a number of movies reviewed by RFA on Douyin, the Chinese language model of TikTok, present.

The world’s two largest economies have been engaged in an escalating tariff struggle that threatens to roil world commerce and upend provide chains, whereas sparking rising considerations over a full U.S.-China decoupling.

U.S. President Donald Trump has levied duties of 145% on imports from China - and as much as 245% on some merchandise. Beijing has retaliated with a 125% tariff on U.S. items.

On Thursday, Trump struck a extra conciliatory tone, expressing confidence that Washington and Beijing may attain a deal on tariffs “over the subsequent three to 4 weeks.”

President Donald Trump to reporters within the Oval Workplace, April 17, 2025. At rear is Commerce Secretary Howard Lutnick. (Alex Brandon/AP) This follows the U.S. administration’s transfer to exempt sure merchandise, together with smartphones and laptops, from the lately introduced duties.

However in China’s prime tech-oriented export strongholds like Dongguan metropolis in Guangdong province, Suzhou in Jiangsu, and Jiaxing in Zhejiang, the speedy fallout of the commerce dispute is obvious in manufacturing facility flooring stuffed with towering stockpiles of unshipped items.

Stockpiles of unsold items In a sprawling 20,000-square-meter warehouse in Jiaxing – a prefecture-level metropolis the place exports made up 75% of the full commerce quantity of 481.84 billion yuan (US$66.51 billion) in 2024 – heaps of merchandise initially meant to be exported now lie deserted, in line with a video posted by an unnamed Douyin person.

He famous that merchandise as soon as valued at over US$100 within the U.S. market now battle to promote even at deeply discounted charges of some {dollars}.

“The tariff struggle has triggered a number of foreign-trade leftover items,” he mentioned.

“Any piece of clothes right here can promote for US$100 {dollars} (within the U.S.), however now it's being offered by tons, and the common value of 1 piece is just a few cents, and nonetheless nobody is shopping for it … It’s inconceivable to outlive.”

U.S. footwear model Crocs’ signature rubber clogs – which usually retails for $30-$70 a pair within the U.S. – at the moment are being offloaded for mere pennies in China, the vlogger mentioned.

Crocs has manufacturing services in China. In February, it projected Chinese language imports will account for about 15% of its stock and that its fiscal 2025 income may decline by about $11 million as a result of tariff headwinds.

However even merchandise which have traditionally been focused solely for the home market haven't been spared, as U.S. tariffs threaten China’s gradual and still-fragile shopper sentiment restoration, buoyed by a slew of stimulus measures to drive consumption.

Take the case of the long-lasting 400-year-old conventional Chinese language knife model Zhang Xiaoquan. Exports account for lower than one % of the Hangzhou, Zhejiang-based firm’s annual gross sales, however its knives are being offered by the tons on the value of only a few cents per knife, the vlogger mentioned in a video submit on Douyin.

Pivot to social commerce Additional north in Jiangsu’s Suzhou metropolis – the place overseas commerce quantity hit a file 2.62 trillion yuan (US$358.9 billion) in 2024 – one manufacturing facility is pushing its staff to promote its overstocked blankets on-line, one other video posted on Douyin by an worker confirmed.

In accordance with the worker of Suzhou Vigorous House Textiles Manufacturing facility who posted the video, a manufacturing facility supervisor managed to promote greater than 60 blankets by tapping his personal kin, associates, and acquaintances to whom he made half these gross sales.

On the similar manufacturing facility, which primarily produces blankets, staff have been additionally knowledgeable that their working hours will probably be decreased and that solely their fundamental wages can be paid, as a result of challenges in exporting to the U.S.

“We at the moment are dealing with a commerce struggle, which has affected our orders ... In case you have an excellent job exterior, you'll be able to go away,” the manufacturing facility supervisor could be seen telling practically 100 feminine staff, in the identical video posted on Douyin.

As extra individuals take to promoting on-line, e-commerce corporations say they're discovering it arduous to compete with closely discounted costs of leftover export items being offered through social commerce platforms.

“With the brand new tariffs within the commerce struggle, it's inconceivable to make a revenue. Basically, enterprise in all sectors isn't good this 12 months,” Zhang, an e-commerce entrepreneur in Yangzhou, Jiangsu, instructed RFA.

Like the opposite businessmen and specialists RFA interviewed, Zhang supplied solely his first identify for security causes.

Reliance on exports China’s so-called “troika” of consumption, funding, and commerce that drives the nation’s financial development really solely has one left: overseas commerce, Chen, a Guangdong-based scholar, instructed RFA.

“China has little home demand as a result of the common revenue of Chinese language individuals accounts for too low a proportion of GDP, so their consumption capability isn't good. China can not afford to lose the U.S. market,” he added.

To make sure, the intensifying tariff struggle has put to the check Chinese language President Xi Jinping’s “twin circulation” technique – which designated China’s home market because the mainstay of its economic system and emphasised a discount in conventional reliance on export-led development.

Consultants argue that China stays extremely reliant on the U.S., its prime export market, to which it exported items value $438.9 billion in 2024.

“I've labored within the manufacturing business for greater than 10 years and I perceive clearly the ratio of China’s inhabitants to manufacturing. This financial state of affairs (now) could be mentioned to be unprecedented (and never seen) in a long time,” mentioned Chen Xiang, who beforehand labored as a supervisor in export factories in Zhejiang, Jiangsu and Guangdong – the place many have now issued “vacation notices.”

One clothes export firm in Jiangsu province issued a vacation discover asserting a suspension in manufacturing from mid-April till end-June.

In the meantime, {an electrical} home equipment producer in Guangdong’s Dongguan metropolis introduced a one-month shutdown citing an absence of orders.

RFA additionally discovered that dozens of corporations in Zhejiang – the place exports accounted for 70% of the province’s gross home product in 2024 – had posted vacation notices.

In Zhejiang, greater than 50% of its export corporations are anticipated to cease manufacturing and take a “lengthy vacation,” after the Labor Day public vacation on Might 1.

“It’s like this in Jiangsu, Zhejiang, with much more factories in Guangdong now closed. Folks in some locations can hardly survive. With tariffs elevated to this extent, China-U.S. commerce is sort of decoupled,” Chen instructed RFA.

In 2024, China’s whole manufacturing output reached 40.5 trillion yuan (US$5.65 trillion). Overseas commerce quantity - exports and imports - was 43.85 trillion yuan (US$6.1 trillion), of which exports accounted for 25.45 trillion yuan (US$3.49 trillion).