SHENZHEN, China—Jack Shao watched as his young coworker climbed on to the roof of their four-story factory and threatened to jump.
The worker sat on a small, decorative arch atop the pink tile building, his beige jacket stark against the blue sky. Below him, thousands of workers were gathered for a labor protest. Minutes before, they had been shouting, “Give us back our wages!” Now, they were imploring the man to step back.
It was late afternoon on December 18, and management at the G. Credit factory in Shenzhen, a huge city in Guangdong province, China’s manufacturing heartland, had just informed its 2,600 employees that they wouldn’t receive their monthly wages on time. The six-year-old company assembled smartphones and other products for Huawei, Samsung, Motorola, and other prominent companies—and now, apparently, it couldn’t afford to pay its workers.
Shao, 35, was overcome with anxiety. In 2010, when he was working at a factory in the nearby city of Dongguan, he witnessed a huge labor protest, which dispersed only after police fired live rounds into the air. But he’d never seen a suicide.
“I knew him by his face, but don’t remember his name. He worked on a production line,” Shao said. “He stayed up there for five or 10 minutes. Then he came down.”
China’s once red-hot growth is cooling, and G. Credit’s financial woes—and subsequent worker protests—underscore the slowdown’s tremendous human costs.
Scores of factories in manufacturing centers, such as Shenzhen—a city of 10 million that is often called “the world’s factory floor”—have closed in recent months.
Mobile-phone manufacturers have ranked among the hardest hit, squeezed by rising competition and falling demand. About 13 major electronics manufacturers in Shenzhen failed in 2015, according to the Shanghai-based financial newspaper National Business Daily.
Experts say that China’s labor rights laws are seldom well-enforced, and that factory closings can be messy, unpredictable, and sometimes violent.
“We’ve seen no indication that things are getting any better,” said Geoffrey Crothall, a Hong Kong-based spokesman for the nonprofit China Labor Bulletin. “In Guangdong in particular, we’ve seen over the past two or three months in particular an increase in the number of labor protests, strikes, and labor unrest in general. As factories continue to close down, the manufacturing sector continues to contract, all these issues which have remained dormant and unresolved for decades on end are now coming to a head.”
Even Apple has felt shock waves from the downturn. On Wednesday, the Japanese financial newspaper Nikkei reported that the electronics giant might cut back iPhone orders amid a slump in demand. According to the Wall Street Journal, provincial Chinese authorities have given its primary supplier, Foxconn Technology Group, $12 million in subsidies to minimize layoffs.
The causes of China’s downturn are wide-ranging and complex. Beijing’s leaders are struggling to shift economic power from state planners to consumers, and the country’s real-estate sector is burdened by massive over-investment.
“China grew faster and for longer than any other country in recorded history—they were already in uncharted territory,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics. “Some slowdown was inevitable.”
Yet, the downturn’s speed and intensity have caught many observers off guard.
On Monday investors seized on a downbeat report—the Caixin Purchasing Managers’ Index—as an indication that the manufacturing sector might be slowing faster than government statistics have shown.
That day, China’s benchmark Shanghai composite index fell 6.9 percent to 3,296.66, its lowest level in nearly three months, after triggering a “circuit-breaker” that shut down trading for the day. On Thursday, it plunged another 7 percent, causing the suspension of trading again.
On Thursday night, Shao, wearing a crisp white shirt and blue windbreaker, sat in a McDonald’s reminiscing over his long and turbulent history in Shenzhen.
Since 2008, when he left his hometown in the far-away eastern province of Jiangxi, he has worked as a “production coordinator,” acting as an intermediary between a factory’s suppliers and assembly lines.
For years, he worked seven days a week, 12 hours a day, running constantly between his computer and the factory’s assembly lines. One of his employers produced plastic Winnie the Pooh key chains; another made transformers for laptop charging cords.
When Shao joined G. Credit in 2013, he considered it his lucky break. He earned about $500 per month and had full weekends off, which he would spend in Dongguan with his wife and 5-year-old son. He would cook them dishes from their hometown—spicy stir-fried pork, braised fish with chili peppers—and accompany them on long walks in the park.
“Life was really good—even my relationship with my colleagues was good,” he said.
Then in mid-December, things took a turn for the worse. G. Credit Chairman Liu Chaoqiang called a few dozen high-ranking employees together, Shao among them, and warned them of impending difficulties. The factory was deeply in debt.
He tried to raise their spirits by showing them a clip from a Chinese wartime drama. Shao remembered one line best: “It’s not that we weren’t brave,” one character said. “It’s that we ran out of bullets.”
Things came to a head on December 18, when G. Credit sent an e-mail to employees notifying them that their paychecks were delayed. Workers gathered outside the factory, demanding arrears. Police arrived; Shao’s colleague climbed up, then down from the ledge; and a local government representative promised that the workers would be paid. The protest dispersed about 5:20 p.m., and on Monday, many employees returned to work.
Yet tensions continued to simmer, and erupted into at least three additional protests in following days.
