Trouble in Toyland: U.S. recession jolts China

Trouble in Toyland: U.S. recession jolts China
Dec 12, 2008 09:58
guestGueslist	Dwindling demand hastens closure of at least 3,600 factories, stirs unrest Laid-off factory workers smash an office during a protest at a Kaida toy factory in Dongguan, Guangdong province, in China on Nov. 25 after the company indicated it would not pay them full compensation. U.S. retailers are to plump up weak consumer demand — a symptom of the ailing U.S. economy and a serious problem for China, which makes nine of every 10 toys sold in American stores. 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. “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.” Millions of jobs at stake 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.

Dec 12, 2008 09:58

guestGueslist

Dwindling demand hastens closure of at least 3,600 factories, stirs unrest

Laid-off factory workers smash an office during a protest at a Kaida toy factory in Dongguan, Guangdong province, in China on Nov. 25 after the company indicated it would not pay them full compensation.

U.S. retailers are to plump up weak consumer demand — a symptom of the ailing U.S. economy and a serious problem for China, which makes nine of every 10 toys sold in American stores.

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.

“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.”

Millions of jobs at stake
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.

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