China’s Economic Slowdown Leads to Mass Layoffs and Workers’ Protests

In Q3, China saw a deficit of $11.8 billion in foreign investment according to the regime’s official data; the first deficit since records began.

ON STRIKE: Some 2,000 workers clash with police as they stage a strike outside the Taiwan-funded KOK Machinery rubber factory in Kunshan, in eastern China's Jiangsu Province on June 7. AFP/Getty Images

China’s current trend of economic slowdown has led to a large number of companies shutting down and laying off workers. Large-scale worker protests have been occurring in China due to sudden layoffs without compensation.

Foreign investment has been leaving China at a soaring rate. In the third quarter of this year, China saw a deficit of $11.8 billion in foreign investment according to the regime’s official data. This was the first deficit since records began. The country’s economic downturn was cited as the primary reason for the capital flight.

This trend has led to many companies to shift their manufacturing out of China, leading to massive layoffs of Chinese workers.

Workers’ Plea

Since Nov. 30, thousands of workers in Yangzhou, Jiangsu, have been protesting and demanding reasonable compensation for the sudden suspension of production and termination of their contracts by their company, Yangzhou Baoyi Footwear Ltd.

Wang Qi (pseudonym), a veteran employee of the company for more than ten years, told The Epoch Times on Dec. 6 that the factory suddenly announced, on Nov. 29, that due to the impact of the international environment, the company would shut down on Dec. 31 and would terminate the contracts with the employees. Pandemics, the Russia-Ukraine war, import and export tariffs, labor costs, and the U.S. dollar’s interest rate hike were reasons cited by the company for the shutdown. The workers did not accept this and went on strike to protest the move.

Mr. Wang said, “More than 1,000 people went on strike. If they had followed the law, the workers would not have been protesting, but now we have no choice but to go on strike.”

The manufacturing plant began to make preparations for the relocation and shutdown of production as early as last year, according to Mr. Wang. Since last year, the company has been cutting production lines and reducing workers’ salaries.  The company was planning to move its manufacturing to Indonesia.

Mr. Wang is now pessimistic about the future since workers like him in their 40s and 50s will struggle to find another job after being laid off.  Another employee of the company for 15 years also told The Epoch Times that the workers simply are pleading for reasonable severance pay.

Yangzhou Baoyi Footwear Ltd. entered production in 2007, with an investment of $49.8 million from Taiwan’s Pou Chen Corporation in the first phase and a registered capital of $32 million, with 15 production lines and once had more than 3,200 employees. At the moment, only 1,500 employees remain. As of Dec. 8, the strikes and negotiations were still ongoing as the Taiwanese corporation sought an exit from China.

Censorship and Corruption

Currently, large and small businesses in various fields in China are laying off workers, shutting down, relocating, or suspending production. A wave of protests was triggered by a series of problems arising from unemployment, wage arrears, and lack of compensation. However, due to strict censorship of the Internet by the Chinese Communist Party (CCP), it is very difficult for people to spread protest messages on China’s social media platforms.

Just in the past two months, there have been dozens of protests and strikes all across the country relating to the lack of severance pay, sudden layoffs, and relocation of manufacturing plants to other countries.

China Labor Bulletin reported that in the first half of this year, the number of workers’ strikes and protests in China reached 741 cases, which was close to the figure for the entire year of 2022 at 830. The protests occurred in a wide range of industries from manufacturing to construction, mining, transport, and the service industry.

Such protests are viewed by the CCP as a threat to their authoritarian rule.

U.S.-based Chinese civil rights activist Chen Guangcheng once told former Secretary of State Mike Pompeo, “What the CCP fears most is that its own illegitimacy will be exposed.” The CCP employs a sophisticated system of government agencies to monitor the population and stamp out any forms of political discontent. Any form of protest is viewed as threatening the stability of the regime.

Li Linyi, a current affairs commentator, told The Epoch Times on Dec. 7 that China’s economy is in bad shape, with foreign companies leaving for other countries and China’s own companies moving to Southeast Asian countries. In addition, the CCP’s anti-espionage law, which threatens to arrest foreigners based on ambiguous legal standards, has led to many foreign companies leaving China.

Mr. Li believes that the root cause of all these problems is the CCP’s corrupt practices. He said, “Mass layoffs lead to an increasing number of protests, but the CCP attempts to cover them up. The more the regime does this, the less transparent it becomes, and this only creates a vicious cycle that prompts concerned foreign investors to leave the Chinese market. The protests will continue to increase as China’s economy gets worse.”