Chinese factories slow production, workers sent home, and global exports face unforeseen troubles

Factories across China are scaling back operations, sending workers home, and halting production lines as US tariffs imposed by President Donald Trump squeeze Chinese exports. The slowdown has reportedly spread across multiple provinces but is straining industrial towns the most.

In provinces such as Guangdong, Zhejiang, and Fujian, factories are going quiet. Reports from factory workers, managers, and recruitment agents cited by the Financial Times claim that plants producing goods like plastic moulds, toy parts, shoe soles, and electrical appliances have stopped overtime, canceled weekend shifts, and, in some cases, shut down for weeks.

An anonymous worker at a plastics factory in Fujian said operations stopped for a week because export orders vanished. 

“Our export orders disappeared, so we’ve temporarily stopped,” she explained.

Similarly, a 26-year-old toy factory worker in Zhejiang confirmed his employer had granted a two-week leave. “It’s not easy at the moment,” they complained.

Tariffs cause declines in US-bound shipments

The US is now imposing tariffs as high as 145% on most Chinese imports, which has supposedly caused demand from American clients to dry up. According to customs data, the US accounted for approximately 15% of all Chinese exports last year.

At DeHong Electrical Products in Dongguan, workers were given a month off on minimum wage. A notice from the company told employees there was “significant near-term pressure” and confirmed that several American clients had paused their orders.

In Hangzhou, Stellarmed, a producer of endoscopy kits for the US medical market, told workers to use the remainder of April to find new jobs. The company also provided access to a headhunting agency, uncertain about staying in business in the foreseeable future.

A manager at Ningbo Taiyun Electric said production was halted on April 12, though the company has since resumed partial output for European orders. 

“We still have some orders from Europe, we’re trying to get more,” said the manager. “Hopefully, the US will change its policies.”

Han Dongfang, founder of the China Labour Bulletin, said the factory furloughs place industries in a transformation period that could see factories closed and employees lose jobs. 

“The rearrangement of China’s manufacturing sector will be a long-term process, and workers will be sacrificed,” he said.

Recruiters in Guangdong said only the most US-dependent factories were shuttering completely, but many more were reducing hours. Factories like Dongguan Yuanguan Technology, which once ran overtime and weekend shifts, are now open for a few hours in a business week, and hiring freezes are now common.

Local governments step in

Some Chinese cities, like technology and export hub Shenzhen and Dongguan, announced last week they would issue a support package to manufacturers to cover the dent left by broken supply chains. 

While exports suffer, China wants to reduce its reliance on oil imports. According to Bloomberg, Beijing is investing heavily in domestic oil production. The country now rivals Iraq as one of the top five oil-producing nations globally, trailing only the US, Saudi Arabia, Russia, and Canada.

Last year, China imported more oil from the US than any nation besides the Netherlands, which refines oil for European customers. However, as Chinese state-owned oil giants invest nearly $80 billion annually in new wells and facilities, the country is rapidly reducing its dependence on foreign suppliers.

WTI crude oil futures held steady near $62 per barrel on Thursday after falling more than 2% the previous day. Markets reacted more positively to news of a potential increase in OPEC+ output. 

Sources suggest that several OPEC+ nations will likely push for a second straight month of accelerated production hikes in June. Meanwhile, Kazakhstan, an alliance partner, has announced it will not reduce output at its major oil fields or make any coordinated cuts.

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