What it Looks Like When China, Inc. Closes For Business

Despite the lack of headlines -- thanks in large part to a tightly controlled media -- the economic chaos happening in China right now is going largely uncovered. But for many factory workers, the business climate could not be worse. As domestic consumption has leveled off or dropped in many sectors and as exports have faltered, factories are going bust and slashing jobs. This story from the Guardian does an excellent job showing what's really going on. In true investigative journalistic fashion, it paints the picture of a once thriving factory that in a matter of weeks, has become a ghost town. To wit, "The dislocated head of a baby doll stares blindly through the gate; WALL-E and Barbie Pet Doctor boxes are strewn across the yard. Two weeks ago, toy making giant Smart Union was churning out goods for children across the United States and Europe. Now it is in liquidation and 7,000 former employees are in shock."

This, unfortunately, is not an anomaly. In the US, if a 7,000 person company shuttered its doors, it would make national headlines. Not so in China -- it's a just a statistic. According to the story, "Sixty-seven thousand small and medium-sized businesses in China collapsed in the first half of 2008, many in the manufacturing heartlands, says the national economic planning body. Toy firms have been particularly hard hit, thanks to safety scares and product recalls. Textile firms, with wafer-thin margins, are also reeling." And many more firms will as well. Thanks to tightening credit and reduced overseas demand, things are looking grim. One trade association "predicts that by the end of January, Dongguan and its neighbors Shenzhen and Guangzhou will lose 9,000 of their 45,000 factories." Numbers like this suggest a dangerous reality -- China will not be able to maintain its employment numbers to keep up with population growth. And this could cause not only economic trauma, but what the Chinese government fears most in their harmonious society, civil unrest. They had better get to scrapping the Olympic stadium and that horizontal jumbotron fast …

- Jason Busch