Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace

If you're sick, stay home!

Feb 26, 2020

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Make Me Smart with Kai and Molly
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy

Are factory jobs leaving China because of the U.S. tariffs?

Jennifer Pak Dec 18, 2019
Share Now on:
HTML EMBED:
COPY
Workers at a shoe factory in Southern China. Most of them come from the poor countryside to give their families a better life. Shanghai 808 Studio

Are factory jobs leaving China because of the U.S. tariffs?

Jennifer Pak Dec 18, 2019
Workers at a shoe factory in Southern China. Most of them come from the poor countryside to give their families a better life. Shanghai 808 Studio
Share Now on:
HTML EMBED:
COPY

Factory worker Li Xiangjun has salt-and-pepper hair and wears a worried expression when he poses for a photograph. When visited by “Marketplace” in Southern China’s Zhongshan city, the 54-year-old was on medical leave.

“A few days ago, I fainted and collapsed,” Li said.

He attributes it to night shifts and a lack of sleep during the daytime. Li works at a factory manufacturing screws for golf clubs sold to the U.S. The schedules there are grueling compared to his previous employment at the United Shoe factory, which manufactures boots for brands like Minnesota-based Red Wing Shoes.

However, he was laid off from the shoe factory in December 2018 when it relocated to Cambodia in Southeast Asia.

“I heard the company is offering a salary of 800 yuan ($110) a month in Cambodia, whereas our salaries were five times more,” Li said.

Li Xiangjun lost his job at a shoe factory in Zhongshan city last year.  He said it's not easy for someone over the age of 50 to find factory work again. (Credit: Shanghai 808 Studio)
Li Xiangjun lost his job at a shoe factory in Zhongshan city last year. He said it’s not easy for someone over the age of 50 to find factory work again. (Shanghai 808 Studio)

According to President Donald Trump, Li’s job loss is among the three million manufacturing jobs that disappeared in China because of U.S. tariffs imposed on hundreds of billions of dollars of Chinese exports.

The U.S. has last week reached what’s being called a “phase one” trade deal with China. The Trump administration says it has agreed to scrap planned tariffs on $160 billion of Chinese goods and to cut the tariff rate on another $120 billion of goods in half.

Trump said that China needs a trade deal with the U.S. more than the other way around.

According to China’s National Bureau of Statistics, 3.8 million manufacturing jobs were lost in urban areas last year. As a share of overall urban employment, it was the biggest annual drop in five years, at 1.5%.

However, employment in factories has been declining every year since 2015, long before the U.S.-China trade tensions started.

Chinese official data also shows the share of manufacturing declined from 22.7% to 17.3% out of overall urban employment between 2014 and 2018.

Part of that may be the result of automation and manufacturers leaving China.

Li Guilian speaks to Marketplace over lunch since it was hard for her to request for time off at her new factory job. Li said it is harder to find good factory jobs in China. (Credit: Shanghai 808 Studio)
Li Guilian speaks to “Marketplace” over lunch because it was hard for her to request for time off at her new factory job. Li said it is harder to find good factory jobs in China. (Shanghai 808 Studio)

Former United Shoe worker Li said he was not shocked that he was out of a job last year.

“We heard from factory managers that our company wanted to move out of China, starting a few years ago,” he said. United Shoe did not respond to repeated requests for interview.

Manufacturers have cited rising costs for labor, raw materials, rent and stricter environmental checks from the government as top reasons for wanting to leave China. The U.S. tariffs may speed up their exit plan to low-cost countries in Southeast Asia.

The former site of the United Shoe factory has signs looking for a new tenant after the company's boss moved operations to Cambodia. (Credit: Shanghai 808 Studio)
The former site of the United Shoe factory has signs looking for a new tenant after the company’s boss moved operations to Cambodia. (Shanghai 808 Studio)

“The factories that remained in China, tended, although not exclusively, to be more of the high-end, value-added factories,” said Geoffrey Crothall with the Hong Kong advocacy group China Labour Bulletin.

These higher paying jobs are not available to workers like Li Guilian (no relation to Li Xiangjun). She dropped out of school after the second grade and was also laid off by the United Shoe factory.

“I received some compensation from the factory and also a bit of government money,” Ms Li said.

That money is not enough for her to stop working even though she is past 50, which is the official retirement age for women employed in the private sector.

China has a pension system, but for years employers could get away without contributing for their workers. The rules were strengthened in 2008 but it was too late for Ms Li.

United Shoe has not contributed enough for her to receive a pension, even after working for the company for 18 years.

She is eligible for a pension if she pays in another 50,000 yuan ($7,100), which is more than a year’s worth of her current salary at her new job.

“I don’t have that kind of money,” Ms Li said.

Li Xiangjun lives in a tiny room to keep expenses low. He is saving for medical emergencies because people in China can still go bankrupt from a major illness. (Credit: Shanghai 808 Studio)
Li Xiangjun lives in a tiny room to keep expenses low. He is saving for medical emergencies because people in China can still go bankrupt from major illness. (Shanghai 808 Studio)

Even with a social security insurance system, workers need to save a lot. Mr Li Xiangjun’s fainting spell landed him in the hospital for a few days.

“The health insurance covered some of the costs, but I was too scared to stay longer and checked out early. I still had to pay 3000 yuan [$430],” he said.

At the same time, he is still paying off his wife’s medical bills of some 100,000 yuan ($14,000) — more than two years of his current salary.

He considers himself lucky to have found another job.

China’s statistics show there are still 72 million people in urban areas working in the manufacturing industry, most of whom are from the poor countryside trying to give their families a better life.

Factory work has allowed Mr Li to build a new family home, put his children through college and support his elderly parents.

“My wife and I have also helped our two sons pay for their weddings and put down payments on their first homes,” Li said.

But at what cost?

Zhang Yonghong found it easy to get work sewing at shoe factories when she first left her village in central China in the 1990s. (Credit: Shanghai 808 Studio)
Zhang Yonghong found it easy to get work sewing at shoe factories when she first left her village in central China in the 1990s. (Shanghai 808 Studio)

Both Mr Li and his wife, Zhang Yonghong, traveled 700 miles from their village in central Hubei province in the 1990s to work in factories, leaving their children, when they were just a few years old, behind.

“Being apart from my children for two decades, our relationship has suffered, even though I called and wrote letters to them regularly,” Zhang said.

Still, she has fond memories of working at the United Shoe factory. Her husband, Mr Li, felt the company was a good employer, which he said is not easy to find nowadays. They do not blame the United Shoe factory for leaving China.

“The boss wasn’t making money,” Mr Li said.

The factory’s closure was just business, he said.

Additional research by Charles Zhang

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.