China Factories Are Getting Abandoned, Leaving Countless Workers Laid Off
The slowing down economy in China has beaten its industry. Many factories are getting abandoned and have to lay off countless workers.
An obvious decline can be seen from the steel industry, leaving abandoned mills that show the golden era when the country's economic ascended. The Fufeng steel plant located on the outskirt of Tangshan was once a booming industrial hub about 200km south-east of Beijing, according to The Guardian.
Early last year, the company declared its bankruptcy and had to fire 2,000 workers. The closing process itself had involved protests. There are now only three security guards looking after the decaying facilities, which had to be abandoned because of the huge over-capacity and dropping demand. And Fufeng is not alone, there are many others in the region.
Not far from Fufeng complex, another abandoned factory is the China Metallurgical Hengtong Cold Rolled Technology. For those who still own the jobs, they have to accept salary reduction since the steel prices plunge plus there is no more support from the government. A man working at the nearby Guafeng mill complained that his monthly salary had been reduced by 25%. "Life is really hard right now," he said.
China had reported that last year was the worst growth of Chinese economy within 25 years, which caused more concerns about the effects to its people and the financial markets across the world.
The New York Times has mentioned that "China's economy is faltering, prompting concerns that are now shaking global stock markets." Fang Minghua, a man from Dongguan, China, has stated that when it comes to the economy, politicians and business leaders talk about innovation and improvement in the industry. "but I think that is just a slogan. It's really hard to carry out," said Mr. Fang.
For decades, Dongguan had contributed in the increasing exports of garments, furniture, shoes, and other products. Mr. Fang mentioned that there was about a third of the factories there had been shut down, and the others were still struggling. The decline has brought a difficult situation for the government.
There has been encouragement from the official to limit low-end exports, and promote the high-tech manufacturing and service sector. Newer and more modern companies are increasing in China, however, it will need more times to balance the traditional manufacturing, which is getting lesser but still crucial employer in the country. Some traditional manufacturers' response toward the economic slump is by moving farther inland or overseas.
It seems that China has been trapped, as stated in the Zero Hedge. It said, "As for China itself, authorities are reluctant to allow the market to purge uneconomic productive capacity for fear of sparking social upheaval. That means perpetually bailing out companies that find themselves in trouble, thus preserving unwanted supply and fueling the disinflationary impulse."
A single bankruptcy could affect the whole bond market, remove innumerable companies, and leave millions of workers laid off. Meanwhile, when it has to save the broken companies, it will add more imbalanced capacity and more productions, which then leads to even lower prices and more severe bailouts.