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A man rides a bicycle at an abandoned industrial area of Houjie, Jan. 27, 2016 in Dongguan, China. (Lam Yik Fei/Getty Images)
A man rides a bicycle at an abandoned industrial area of Houjie, Jan. 27, 2016 in Dongguan, China. (Lam Yik Fei/Getty Images)

Fear and unrest as jobs disappear in China’s industrial heartland Add to ...

The bus trip from the factories of Foshan to the Yangtze River city of Luzhou takes about 30 hours. There are no sleeper berths, just a long, slow grind home in a small, hard seat.

In the past, Mr. Li could push through the discomfort by thinking about what he would find at home over the lunar new year: the taste of the region’s fiery home cooking, the view of the nearby mountains and the sight of his sons – aged 4 and 5 – whom he rarely sees.

This year, he is thinking about whether he wants to buy a return ticket.

“I’m not 100 per cent sure that I will be back after the holiday,” he says, offering only his surname. “Business is not so easy right now. And my earnings aren’t as good as before.”

The lunar new year, known locally as the Spring Festival, is the happiest date on the Chinese calendar. But for Mr. Li, this year’s celebrations will be tinged with bitterness. “How could I be happy?” he asks. “We came out here to make money, but these days I have no work to do.”

China’s economy has slowed to its most sluggish pace in a quarter-century, the result of massive industrial and real estate overcapacity, shrinking foreign demand and an aging economic structure that planners are struggling to modernize.

But some places have been hit harder than others.

That includes the Pearl River Delta, where Mr. Li and millions of others came to find better lives.

The region has long been the closest thing China has to a beating economic heart. From a space the size of the Greater Toronto Area, it generates 9.1 per cent of China’s gross domestic product (nearly triple the contribution from Beijing) and 26.2 per cent of exports, while attracting 20.8 per cent of the country’s incoming foreign direct investment.

Its foundation was built less on technical ability than the ability of companies to amass a giant number of people willing to work for the equivalent of $50 a month.

But minimum salaries have since risen nearly tenfold, and foreign competition has eaten away some of China’s advantage. The economic downturn, and plunging Chinese exports, have made things worse, particularly in Guangdong province – the heart of the Pearl River Delta.

“Although manufacturing in Guangdong is not dead, it’s not the future of employment generation,” said Geoffrey Crothall, spokesman for the China Labour Bulletin, which promotes worker rights.

Coming years will instead increasingly demand skilled labour, Mr. Crothall said. “The old model that drove China’s economic miracle – labour-intensive, low-cost manufacturing – that’s been on the way out for many years now and will continue to disappear.”

But the transition has often been difficult. The China Labour Bulletin has documented a spike in labour-related strikes and protests – 88 since December in Guangdong alone – as workers are denied wages and lose jobs.

“We’ve had a lot of layoffs this year,” said Fan Hequan, who makes central air-conditioning units in Foshan. At his factory, a team once had 100 workers. Now it’s down to 50 or 60 – some positions replaced by robots, but most vanquished by the economy.

New home construction has tanked in China, and with it the demand for appliances. Mr. Fan’s hours are down, and he’s feeling financial pain. “This year, I feel the gap between my income and expenses is quite obvious,” he said.

Many people are already gone. Chinese cellphone providers report that the number of users in Dongguan, one of the region’s most important manufacturing centres, fell to eight million last year from 12 million in 2007.

First, the makers of clothes and shoes abandoned China for Vietnam and its cheaper workers. Then hard times struck a more diverse group of companies. Last year, Nokia shut down factory operations, Japan’s Citizen closed a wristwatch-parts facility, Wintek shuttered a touch screen plant and Fuchang Electronic Technology shut down its Shenzhen operation.

Those four companies alone cut 21,000 jobs, not including the constellation of supporting factories also affected.

Last week, Dongguan Mayor Yuan Baocheng said 500 foreign companies had closed their doors in the city in 2015.

Many more factories have gone into hibernation, either ceasing production or dramatically cutting it back. Lin Jiang, deputy director of the Hong Kong, Macao and the Pearl River Delta Research Center at Lingnan (University) College, estimates the number of those “semi-closed” factories stands “three to four times greater than that 500.”

Other factories remain open because they have been ordered to do so, as a job-preserving measure.

Mr. Crothall noted that the current situation has not yet reached the grim days of 2008, in the turmoil of the global financial crisis.

But the foreseeable future isn’t pretty for a place like Dongguan.

“The whole city in 2016 may continue to face very difficult times,” Prof. Lin said. “There may be some acceleration in the number of factories closed.”

If Chinese officials do not intervene with tax breaks or new stimulus spending, said John Zhu, greater China economist at HSBC, parts of the region’s manufacturing prowess risk falling into dangerous disuse.

“What’s happening now is you are reaching a stage where even healthy industries, or companies that would normally be profitable, are running into stress,” said John Zhu, greater China economist at HSBC.

“It’s actually quite an urgent situation, and the sooner they provide more support, the better,” he said.

The precarious state is obvious to the workers as they head home for the holidays.

“Some of the factories we’ve done business with for many years have suddenly gone bankrupt or shut down,” said Bi Weiguo, 46, who repairs machinery used by furniture-makers.

It does not make for happy spectating and he, too, has thought about staying home after the holidays rather than leaving his 70-year-old parents and his two children.

But the math still favours staying in Foshan. “I have land back home, and we rent it to other people to farm,” he said “But working here can bring me much more income than working at home.”

With reporting by Yu Mei

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