Yang Zengkui climbs a hill behind his small restaurant on the industrial outskirts of Shijiazhuang. Under a blue sky that was once rare here, he looks out over China's Cement Alley. Twenty, maybe 30, cement plants are visible. It's hard to count them all: tucked into hillsides, standing tall beside a reservoir, wedged between wheat fields.
Easier to count is how many are still operating.
"Two," Mr. Yang says, squinting against the sun. The rest are closed, some already razed and reduced to pits of wrecking ball rubble.
Mix together limestone, calcium, silicon and a few other ingredients at 1,500 C and you have cement. You also have one of the single most important ingredients in China's remarkable rise.
Factories built China's exports to the world. But cement built China: the vast forests of high-rises that populate its new cities, the innumerable roads and bridges that connect them and the endless bullet-train lines that propelled the country's race away from poverty. China famously used more cement in three years than the U.S. in the entire 20th century.
But as China's economy falters and its leadership scrambles to find new foundations for growth, cement's seemingly unstoppable reign is suddenly in question. This year, for the first time since 2000, Chinese cement output is falling. In April, cement output fell 7.3 per cent from last year, and the decrease appears to be gaining speed. To date in 2015, cement is down 4.8 per cent, according to the National Bureau of Statistics of China. Prices in some places have been cut in half, sapping momentum from an industry that until recently enjoyed 11-per-cent profit rates. Now, the industry says most companies in northern China are losing money.
It's a startling change. Even last year, Chinese cement output was up 1.8 per cent, capping a roaring expansion that saw China rise from just over a third of the world's demand in 2002 to nearly two-thirds in 2012, when it used 27 times more cement than the U.S.
The most recent years were so ebullient that Gao Zhi calls it the "crazy time."
Now it looks to be over, said Ms. Gao, the dean of the cement industry consultancy at the China Development Strategy Institute for Building Materials Industry, which both helps set national policy and monitors the industry. She uses a pen to sketch a line graph that rises quickly before levelling off and then plunging. It's meant to show concrete demand over time. She points to the apex. China is now here, she says, and may experience a brief plateau. Over the next two decades, she expects a big decline. "The fall in demand could be 30 per cent, or even 50 per cent," she said.
It's no outlier prediction: The Chinese industry has studied places like Japan and Taiwan, and discovered that "from peak to trough, the difference in demand could be 50 per cent or so," said Chen Bailin, a deputy director at the China Cement Association. "But as for whether that will take 10, 20 or 30 years – that's hard to say."
The new reality for cement is reflective of the ways China itself is changing. The "industry is closely related to the macro economy and national policies," said Qu Hui, vice-general manager of Gansu Shangfeng Cement Co. Ltd., one of China's top 20 cement companies, in a written answer to questions. "The slowdown in economic growth and the weakening of investment in fixed assets and infrastructure construction all have a major impact on cement demand."
Some of this might be for China's good, since the recent boom squandered huge amounts of cement used as unnecessary construction filler and overbuilt "fat beams." The industry also suffers from gross overcapacity, with nearly a quarter more cement plants than needed.
But the drop this year has been not in capacity but in actual output, which "is certainly an important signal that the Chinese economy is not doing well," said Chi Lo, senior greater China economist with BNP Paribas. The change is, in part, intentional. "The government wants the economy to slow in order to push through structural changes," he said.
It is also pushing companies to grow beyond China as opportunities at home diminish. All of the country's top cement makers have launched overseas operations. Shangfeng recently entered a joint venture to build a $114-million (U.S.) cement plant in Kyrgyzstan and has its eyes on "newly booming markets in southeast Asia, Africa and South America," Mr. Qu said. "We will work to become a trusted, respected international supplier."
But Shijiazhuang's Cement Alley, and the people who made it run, have no overseas option – and the trouble they've seen offers a preview of the dislocations that China's massive economic changes stand to bring. Dozens of local cement plants have been shut down by government order, many of them older facilities with outdated technology and outsized contributions to pollution that, until recently, made this a place so smoggy that blue sky rarely appeared.
If they had a choice, however, few of those who live here would trade cleaner air for their jobs.
Every morning at 5:30, beside a gas station on the outskirts of Shijiazhuang, a crowd assembles on electric mopeds. They are workers in ball caps, olive fatigues and canvas shoes. This is one of several local cash corners that have dramatically grown in recent years, as men – and a few women – without work gather in hopes someone will come and hire them for the day. One worker estimates 3,000 come here every day, and that 80 per cent to 90 per cent once worked at cement plants.
Plant owners received compensation when they were ordered to shut down. None of the workers The Globe and Mail spoke to had received anything.
They come to cash corner willing to do anything: Swing a hammer, haul bricks, pull weeds. But they are largely unskilled – an employer looking for carpenters can find none – and the flood of desperation has lowered a day's pay from $60 to as low as $20. Mr. Ling, a 34-year-old man with two children, now gets work only on half the days he comes here. "There are fewer bosses coming and more people looking for work," he says.
Another man chimes in: "China is a country where the people feed the nation and make it rich. It's not like foreign countries where the nation feeds the people," he says. In Shijiazhuang, in other words, what the postcement world looks like depends on the workers' own ability to reinvent themselves.
It's not simple. Take Mr. Yang, who figures 30 per cent of those in his home village of Nanbaozhuang once worked in cement. Now they're either farming – for a third the income – or leaving town to find jobs. Some have sought new futures in growing grapes or walnuts. But the local village secretary recently rented out big chunks of their communal land to an outsider who wants to build an ecopark. Nearly 20 families petitioned for change, but haven't succeeded.
Mr. Yang himself rented office space from a shuttered cement plant. The rent was cheap, and he figured he could use the space to manufacture solar equipment. "It's low-carbon and environmentally friendly. The country has policies to support it," he says. But he hasn't been able secure a partner or funding.
So instead he runs a small restaurant, where patrons can sit on stained plastic chairs to slurp noodles under a sign advertising 60-cent beers. Business hasn't been good, with most of the nearby cement plants closing. One of his customers says she hasn't bought new shoes in two years. "We are all under pressure," Mr. Yang says. "As construction stops, who is going to use cement?"
With a report from Yu Mei