China Is the World’s Next Rust Belt
Move Over, Michigan, China Is the World’s Next Rust Belt
Six cities in Liaoning province, including Shenyang and Anshan, recently announced they are converting abandoned industrial sites to farmland. Dongguan, once a booming factory center, is on the verge of bankruptcy as companies close, leaving the local government severely cash-strapped.
Just two years after China overtook the U.S. to become the world’s largest manufacturer, the country faces the prospect of decades of de-industrialization. And there is little Beijing can do to arrest the slide.
Globalization once propelled China. Hong Kong manufacturers flocked to that country’s coastal regions in the early 1980s largely because labor costs were low and regulation lax. Later, companies had little choice but to move to China because their competitors had already located there, and soon suppliers congregated around assemblers, forming efficient industrial communities. The country became an integral link in the production plans of manufacturers, large and small.
As a result, China made itself the manufacturing powerhouse. From nowhere, it became the world’s biggest producer of steel, cameras, toys, sporting goods, shoes, garments, textiles, televisions, cell phones, pens, you name it. One enterprise, Shenzhen-based BYD Co., grabbed more than half the global market for mobile phone batteries. One city, Datang, produced more than a third of the world’s socks: about a pair and a half for each man, woman, and child on the planet each year. The country manufactured eight out of ten of the world’s microwaves and nine out of ten of its DVD players. China churned out 70% of all counterfeit goods.
But as the Chinese say, “no feast lasts forever.”