The Storm Over Unpaid Wages: China's Factory Workers Rise Up in Protest
Economic turmoil in China due to Trump's tariffs; millions of jobs potentially lost
Here's a lowdown on the uproar shaking China's industrial heartland, caused by mounting trade tensions with the U.S. and President Trump's decisions.
FE Online Join Us Now The furor among Chinese factory workers escalates as they take to the streets for unpaid wages, with their struggles intensifying the pressure on China's economy hit hard by U.S. trade tensions.
The latest wave of protests erupted against the backdrop of already heightened trade hostilities. In April, the Trump administration slapped a hefty 145% tariff on Chinese goods, causing manufacturing and exports to take a significant hit. According to Goldman Sachs, this could put up to 16 million jobs at risk across various sectors in China.
Unrest Amidst the Storm
In a decisive move earlier this week, more than a dozen migrant workers in Tuanjie, Xi'an prefecture, Shaanxi province, demonstrated at a local project office, demanding wages owed since February 2025. Meanwhile, construction workers in the northeastern city of Tongliao threatened to leap off buildings in desperation as their back wages remained unpaid. Similar scenes of unrest have been reported from various provinces.
Trump Tariffs: A Double-edged Sword for China
The lacerating impact of the trade war is evident in China's economic indicators. Factory activity slid steeply in April, marking its sharpest contraction in 16 months, while new export orders plummeted to levels not seen since the pandemic teleported into our lives three years back. Industry sources share that many factory owners and suppliers have been advised to pause or postpone shipments, citing reduced demand from the U.S., exacerbating economic uncertainty.
Despite China's retaliatory tariffs, topping out at 125% on American goods, analysts predict that Trump still holds a strong hand. The U.S. President recently claimed that China's economy is "suffering greatly" due to the tariffs. He also insisted that Chinese vessels are turning away in the Pacific Ocean and that Beijing is eager to resume trade negotiations in a bid to break the deadlock. In tandem, Chinese President Xi Jinping has stepped up diplomatic outreach to neighboring Southeast Asian nations like Vietnam, Cambodia, and Malaysia.
Factoring in the tariffs' complex effects, both countries are navigating a tricky dance, balancing impacts on employment, trade balances, and economic growth.
A Glimpse at the Implications:
- Employment and Production: The surge in tariffs on Chinese exports negatively impacts employment in sectors heavily dependent on U.S. trade, potentially leading to layoffs and diminished production capacity when factories scale back operations.
- Wages and Benefits: Workers may see reduced wages and benefits due to falls in factory revenue.
- Trade Deficit and Economic Growth: The escalating tariffs strain China's trade dynamics, increasing the potential for a reduced trade surplus and negatively impacting economic growth. China has attempted to adapt by diversifying its export markets and focusing on domestic consumption.
- Inflation and Consumer Spending: The tariffs may result in increased prices of imported goods in the U.S., affecting China's export prices indirectly, although less directly influencing its internal economy.
- Retaliation: China has countered with its own tariffs on U.S. goods, impacting trade alliances and agreements.
- Diversification and Internal Development: In response to these challenges, China has sped up its efforts to diversify its economy, aiming to reduce dependence on exports, foster long-term economic resilience, and focus on domestic innovation and technology.
- The escalating trade tension between the U.S. and China has intensified the pressure on China's economy, causing disputes in the market and finance sector.
- The workers' protests in China, demanding unpaid wages since 2025, are partly fueled by the U.S. tariffs on Chinese goods, which have led to layoffs and threatened employment across various sectors.
- Chinese President Xi Jinping is actively seeking diplomatic ties with neighboring countries as a means to potentially alleviate the impacts of the tariffs on their economy.
- The implemented tariffs are a complex issue, as they not only affect trade balances and economic growth, but they also impact employment, wages, and consumer spending, both in the U.S. and China.
