Dongguan Chang An Mattel Toys is one of the few factories still actively recruiting

China’s 290 million migrant workers have been the hardest hit by the coronavirus having already been under pressure from the US-China trade war. One worker, Rao Dequn, has worked for 25 years in Chinese factories making goods for overseas markets, but will lose her job in less than a month

After spending more than half her life working in factories in Guangdong, Rao Dequn’s 25 years as a migrant worker could be coming to an end within a month, with the coronavirus and US-China trade war leading to another factory closure in Dongguan’s withering export-oriented manufacturing industry.

Mother-of-two Rao, 43, and around 900 colleagues were informed by letter at the end of July that Dongguan Dingyi Shoes Company would be closing in five weeks as their “employment at the company, on top of all other agreements you may have with the company, will be terminated”.

“It will be very difficult to find another stable factory to work for … many nearby factories are closing down or laying off workers,” said Guizhou native Rao, who has been working at the shoe factory for the last 10 years.

Like many of China’s 290 million migrant workers, Rao’s working life has been spent on production lines to earn a better income than was possible in her rural hometown but not enough to allow her to settle down in a city.

“I am sad to leave this job and this factory. The boss is a good person, the pay is always on time, and income has always been stable. Many of the workers have been working here for over 20 years,” added Rao, who has been promised a redundancy package in line with the local labour laws.

The footwear factory, funded by Taiwanese investors since 1990, imported materials and designs to be turned into finished products for overseas markets.

But with China now losing its low-cost advantages, and the coronavirus leading to the cancellation of export orders, the heyday for the once-successful business model now appears to be over.

Chinese authorities had hoped to phase out of labour-intensive manufacturing like Dingyi in hopes that higher value-added industries would take over to help the country move into a more lucrative position in global value chains.

But fears are growing that China may have underestimated the importance of factories like Dingyi in providing jobs and social stability.

The darkened job and income prospects for people like Rao, who has been feeding her labour into China’s manufacturing machine since she was a teenager, could also hinder Beijing’s new economic strategy of “dual circulation”, which relies more on the domestic market for economic growth, since there could be insufficient consumer spending.

Zhao Jian, the head of Atlantis Finance Research Institute, said this week that China’s choice of “dual circulation” was a response to the trend toward a reversal of globalisation, led by the decoupling between China and the United States, but the success of such an inward-looking strategy is far from certain in terms of employment, and even economic security.

“While China’s reliance on external demand, on the surface, has been falling in the last decade since the global financial crisis … the export sector is vital for Chinese employment,” he said. “Exporters are mainly private enterprises with numerous small and tiny businesses living on [global] value chains.” According to China’s Ministry of Commerce, the export industry accounts for around 180 million jobs in China, or over a third of China’s total 530 million non-farm jobs.

Closures of factories like Dingyi also affect the local community – the small restaurants, hotels and numerous shops who rely on the workers for their own income – with property agent Li Gang going as far to say “the whole community will be idle or even dead”.

The closure is also a psychological shock for other production faculties in the Dongguan area, who are in similar precarious positions.

Lay-offs and dwindling employment is so widespread in Dongguan that the local government has started to roll out a shared worker programme, in which the local authority acts as a centralised agency to shift surplus workers from an idle factory to one that needs temporary help.

As many as 13,000 workers have taken part in the program since March. The workers are paid 500 yuan (US$72) per month by the local government to take part, while factories avoid official redundancies by offering workers to other factories on contracts of up to three months.

“Few factories are expanding … most factories are suffering insufficient orders. But it also costs a lot to close down a factory … so many factories just suspend production,” said a human resources manager at a factory in Dongguan, who labelled the shared worker programme as “at best a short-term remedy”.

Dongguan Chang An Mattel Toys, one of the world’s largest doll makers, is one of the few factories still actively recruiting. It used the shared worker programme to recruit 250 workers from another factory.