Job jitters mount as China’s factories sputter ahead of Lunar New Year

WA N G ZHISH EN WAS THRILLED when Danish shipper A.P. MollerMaersk gave him two months’ paid leave, relishing the chance to spend time with his wife and daughters in China’s remote northwestern Gansu province.

But his euphoria over what he thought was an unexpected bonus quickly turned to despair when Maersk fired Wang on January 3, less than a month after he packed his bags in the southern Chinese manufacturing center of Dongguan.

Wang said he was one of 2,000 workers laid off at the company’s Dongguan transport container factory which has been idle since early December, as the impact of a trade war between Washington and Beijing ripples through industries from logistics to autos and technology.

“I was sure it was a holiday,” said Wang, 35, who said he worked as a painter at Maersk for nearly six years until he was sacked two weeks ago via China’s WeChat messaging service.

Maersk, the world’s biggest container shipper, confirmed in an email to Reuters it had laid off 2,000 workers through “one-on-one” phone calls and WeChat messages.

In November, the company warned the trade war between China and the United States would hit demand for container shipping as the volume of goods shipped slides.

Two subsidiaries of China’s COSCO Shipping, in a direct response to the trade war, have reduced the number of vessels in Guangdong, causing a plunge in regional shipping freight turnover, according to Guangdong’s statistics bureau.

“I heard most container factories started letting people go on leave early this year, so I felt it was normal for us to have a few more days off as well,” said Wang, who earned a base salary of 3,900 yuan ($574) per month.

Around the Lunar New Year holiday, this year scheduled for early February, millions of Chinese, including tens of thousands of migrant workers, travel back home for family reunions in what is the world’s largest annual human migration.

While many factories traditionally close ahead of China’s most important holiday, Reuters interviews with more than a dozen workers, business owners, labor activists and trade lawyers revealed businesses are shutting earlier than usual this year as the prolonged trade war curtails orders.

A recent Reuters visit to three once-thriving towns in Dongguan in Guangdong province showed clear signs of a slowdown. Scores of shops and restaurants were shuttered, some factories idled and many up for rent.

Danny Lau, a Hong Kong factory owner in Dongguan, said some businesses had closed around 40 days ahead of Lunar New Year.

“Dongguan used to be bursting with factory workers but now with factories gone, people are gone as well,” one taxi driver told Reuters.

“This complex used to be full of workers, eating and chatting when they got off work. Now look at this,” he said, pointing to empty dark alleys in an open air dining place one recent weekday evening.

The slowdown comes as data on Monday showed China’s exports unexpectedly fell the most in two years in December and imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019.

Policy sources told Reuters last week China plans to set a lower economic growth target of 6-6.5 percent this year compared with last year’s target of “around” 6.5 percent.

A recent UBS China survey of 200 manufacturing companies with significant export business or supply to exporters revealed the trade war has had a negative impact on 63 percent of those businesses.

A quarter of those affected have cut jobs, 37 percent have moved production out of China in the past 12 months, while 33 percent plan to move in the next 6-12 months.