You don't say? How could anyone even remotely think the US recession would not damage the Chinese economy? Who did they think was buying cheap products? Bangladesh? To China's credit, the government is (finally) starting to turn some of the profits of recent years into infrastructure projects beyond the select locations that have profited during the economic expansion. They better get cracking though and not follow the American model of dragging their feet.
Declining U.S. orders already have contributed to the closure of at least 3,600 toy factories since the beginning of 2008, according to the Chinese government, leaving hundreds of thousands of Chinese workers suddenly out of work in this sector alone. Some of the shutdowns have triggered violent protests, a situation that could worsen if the Western recession drags on through 2009, as many economists are predicting.
Unemployment in China could deprive a lot of people of their lifeline,” says Hu Xindou, an economics professor at the Beijing Institute of Technology. “So it could trigger social instability or even shake the rule of the Communist party.”
The toy industry has played a major role in China’s economic surge over the past 30 years. Exports account for as much as 40 percent of China’s gross domestic product, and labor-intensive industries making things like toys, shoes and clothing generate millions of jobs for its rapidly growing workforce.
But Chinese toy makers began feeling the economic squeeze well before the U.S. recession was made official in late November.
U.S. retailers trimmed orders after suffering weak sales in the 2007 holiday season — made worse by recalls of dangerous toys.
