Chinese Factories Cut Wages, Shifts Amid US Tariff Pressure

Chinese manufacturers are experiencing significant strain due to the U.S. tariffs imposed to counter China's industrial overcapacity, leading to wage cuts, reduced shifts, unpaid leave, and workforce reductions to stay competitive. Mike Chai, owner of Cartia Global Manufacturing in Foshan, has cut wages by about 30% and halved his workforce since the pandemic, with no further room to reduce staff, forcing him to shorten shifts and ask workers for unpaid leave. While China's official unemployment rate remains around 5%, economists warn that underemployment is worsening, squeezing worker incomes and undermining consumer confidence, which has contributed to near-record low retail sales and zero inflation. The 90-day tariff truce between Washington and Beijing has prevented tariffs from returning to previous triple-digit levels but has not alleviated the economic pressure on workers. Experts like Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, emphasize that the export-driven model is punishing workers through a vicious cycle of lower prices, wages, and consumption, and warn against exporting at a loss. Despite growing exports to regions like the EU, ASEAN, and Australia, the competition leads to further price and wage reductions, worsening conditions for Chinese factory workers.