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Slowdown Highlights Vulnerable Chinese Economy In Midst Of A Trade War

May 20, 2019
Originally published on May 20, 2019 7:55 am
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China's central metropolis of Chongqing used to be known for its rising fortunes, but now the city is struggling with a bleak economic outlook and rising unemployment. As NPR's Rob Schmitz reports, the city's slowdown symbolizes a vulnerable Chinese economy in the middle of a trade war.

ROB SCHMITZ, BYLINE: Twenty-six-year-old He Qiang should be manning his convenience store. But he never has any customers, so he's here, collecting berries by the roadside and shooting them at birds with a slingshot. He's bored out of his mind. He's also worried. He spent his life savings of $35,000 on this store. He heard the economy of Hechuan, a city of more than a million people just outside Chongqing, was booming. It was. Automobile factories here employed thousands of people, churning out SUVs for China's consumer class.

HE QIANG: (Through interpreter) My shop did well for a month after I moved here, but then everyone left. Now they're all gone. Every day, more people leave.

SCHMITZ: Assembly lines have shut down. Workers have returned home. And Hechuan's factories, shops and pocketbooks are empty. He's convenience store is still open, but nobody ever buys anything. So he's taken another job next door as a delivery man at a fast food restaurant. It's steady pay - $500 a month - and he rarely works. The restaurant's usually empty too.

HE: (Through interpreter) I'm barely getting by. I'm waiting to see if the economy picks up this year. When I lose all my money, I'll leave.

SCHMITZ: Hechuan is inside the administrative district of Chongqing, one of four Chinese megacities under the control of the central government, and the only one located far away from a coast. Its population of 35 million lives among the lush mountains of Southwest China, and its hilly city center is split by the Yangtze River. This is China's blue-collar capital - an aspiring middle class and a landscape of factories, the heart of China's industrial sector, a heart whose beat is weakening.

For more than a decade, Chongqing's economy sped ahead with double-digit growth. But in the last couple of years, that's been cut in half. The city's auto sector, which was China's largest just three years ago, plunged by 17% last year alone.

And here, at a downtown job fair, the faces of this slowdown compete for what's left. Thirty-eight-year-old Zhong Hua is one of thousands laid off from his assembly line job at Ford's joint venture with China's state-owned Chang'an. That was four years ago, and he's been to eight job fairs since.

ZHONG HUA: (Through interpreter) The economy here is really slipping. We can feel the impact of the trade war with America here. The auto industry is in recession. There are so many unemployed people here.

SCHMITZ: Zhong says he's barely getting by on the $200-a-month government unemployment checks to help support his wife and two children.

Qiu Dongyang, professor at the MBA Center at the Chongqing University of Technology, says Chongqing's economy is cooling off. But he says that's a good thing. He admits the city's auto sector has been hit hard, but he says the service sector has absorbed many of these jobs as autoworkers become deliverymen for China's thriving online retail market.

QIU DONGYANG: (Through interpreter) It's normal for growth to slow like this. The economy has reached a plateau, and both infrastructure and development in the city have done well.

SCHMITZ: After decades of demolition and reconstruction, Chongqing's city center has become a stunning mix of the natural world - lush mountains crisscrossed by rivers - with a glimmering landscape of steel and glass towers.

(SOUNDBITE OF "RAFFLES CITY CHONGQING TRAILER")

SCHMITZ: And those that rise highest are here at Chongqing Raffles City. A promotional video for the eight-tower project boasts that it has the tallest all-residential building in the world, rising 74 stories over an enormous mall.

UNIDENTIFIED PERSON #1: (Speaking Chinese).

SCHMITZ: The general manager says they sold 95% of the apartments in the first two towers a few years ago, but another tower remains two-thirds unsold.

UNIDENTIFIED PERSON #2: (Foreign language spoken).

SCHMITZ: To make way for the project, the city destroyed much of its emblematic wharf, where boats traditionally stop on their way along the Yangtze. That put hundreds of Chongqing's famous street porters - freelance laborers who use bamboo sticks to carry heavy objects up from the wharf - out of work. But not so for 68-year-old Zhang Peiqing, who's worked as a porter for more than two decades, long enough to live through the city's ups and downs.

ZHANG PEIQING: (Through interpreter) The country is better than before, but it would have been even better if Bo Xilai hadn't been taken down.

SCHMITZ: This is a sensitive topic, but it's one that's whispered by many here. Bo Xilai, party secretary of Chongqing at the height of its boom a decade ago, was a potential candidate to lead China before he was taken down in a corruption investigation that paved the way for Xi Jinping to become China's leader.

ZHANG P: (Through interpreter) If Bo were in Xi Jinping's role, foreigners wouldn't dare bully us like they do now. The economy's been paralyzed since he left.

SCHMITZ: Whether it's from Bo's untimely departure, foreign bullying or just simple economics, a car salesman who only gives his surname Zhou says the economy has never felt this bad.

ZHOU: (Through interpreter) It's the same everywhere in the nation. We're all in this together.

SCHMITZ: Zhou sells SUVs is made by Bisu, the car company in Hechuan that's laid off much of its workforce due to poor sales.

ZHOU: (Through interpreter) I used to sell between one or two dozen cars per month. Now I'm lucky if I sell one.

SCHMITZ: And that's tough for a salesman working on commission, so he's found another job to support his family.

That's not the case for a man who only gives his surname Zhang. Zhang is among the last remaining autoworkers in Hechuan, the town whose factories now lie dormant. He's an electrician for Yinxiang Group, the same company that owns the struggling SUV company Bisu.

ZHANG: (Through interpreter) They haven't paid our salaries for a couple of months now. Workers protested, and the company fired all of them. They punish whoever says anything bad about the company.

SCHMITZ: And that's why Zhang doesn't give his full name. He says the boss of Yinxiang Group owns residential towers in Hechuan. Many of the families who live there were forcibly moved off their land to make way for the company's factories, which now stand empty. Yinxiang Group representatives hung up each time NPR called requesting an interview. But according to the company's website, it spent nearly $2 billion on a development in Hechuan filled with condos, hot springs and entertainment complexes. Employee Zhang is perplexed.

ZHANG: (Through interpreter) Meanwhile, they're not paying us. The factory isn't running. Yet here they are, still building.

SCHMITZ: For the time being, says Zhang, he'll keep working in the hopes that someday he'll be paid his salary again. Despite not collecting a paycheck in months, he says he can't afford to quit.

Rob Schmitz, NPR News, Chongqing. Transcript provided by NPR, Copyright NPR.