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China's economy wobbles ahead of an important political meeting in October

LEILA FADEL, HOST:

China is often referred to as the workshop of the world. Now there are signs that workshop is on shaky ground as China's economy wobbles ahead of an all-important political meeting in October. NPR's John Ruwitch reports.

JOHN RUWITCH, BYLINE: Fan Huiyi is standing on a curb outside one of the biggest employment agencies in the Chinese city of Shenzhen when we meet. He isn't looking for a job, though.

FAN HUIYI: (Through interpreter) I recruit workers - I do human resources for the factory I work at - and not just general laborers, but also technicians.

RUWITCH: If the 26-year-old is honest, though, he doesn't really want to be here. He left his hometown, Dongxing, some 500 miles to the west, out of necessity.

FAN: (Through interpreter) Dongxing used to be a prosperous city. But it has been hit hard by the pandemic.

RUWITCH: So hard that last year when he opened a restaurant there, it didn't survive more than four months. Dongxing sits at the border with Vietnam, a border that's been effectively closed for the whole pandemic.

FAN: (Through interpreter) Because of the pandemic, I couldn't continue with the restaurant anymore. So I liquidated everything and said to my family that I was coming here.

RUWITCH: It's a well-worn path in China, the migration from small towns to big city factory floors. But it seems like a bigger gamble now than even when Fan made the trip just a little over a year ago. China's strict COVID control policies have been dragging down economic growth. Meanwhile, inflation and the Ukraine war are casting clouds over global demand. China's growth in exports, normally a bright spot, has slowed.

FAN: (Through interpreter) It's hard to recruit workers now. We already have too many workers in the factory.

RUWITCH: It's uncharted territory for China. Its strong, steady economic growth has been the envy of others for decades and a pillar of legitimacy for the ruling Communist Party. Next month, that party is likely to hand the man on whose watch the economy has slipped, Xi Jinping, at least one more five-year term as China's top leader. He's betting slower growth won't become a crisis for the party as he pursues political priorities. Down the road, in the neighboring town of Huizhou, Hu Yuting runs a company that makes light fixtures. And things are bad.

HU YUTING: (Through interpreter) We lost about two-thirds of our export business this year. We had 160 people at the peak. Now it's dropped to around 90.

RUWITCH: He says demand from the U.S. has fallen and orders have cratered.

HU: (Through interpreter) We are losing about 400,000 renminbi every month.

RUWITCH: That's more than $55,000. In good times, he could turn a monthly profit of nearly twice that. Hu takes us to the factory showroom and flips on the lights.

(SOUNDBITE OF SWITCHES CLICKING)

RUWITCH: The walls and ceilings are covered with chandeliers, sconces and lamps. An empty conference table sits at the center of the room.

HU: (Through interpreter) We used to meet customers here and talk about designs and prices.

RUWITCH: It sat unused for over two years. With the American market going soft, he'd like to explore new markets, like Europe.

HU: (Through interpreter) But because of the pandemic, foreign customers can't get into China or there are very few, so it's hard to do any business with them.

(SOUNDBITE OF HORN HONKING)

RUWITCH: Outside a bus station in Shenzhen - that's a stop for many who come here in search of factory work - Wu Yelin is squatting under a tree. He's worked in factories here on and off for several years. But he says the uncertainty now and rising cost of living are making him think twice about the path ahead.

WU YELIN: (Through interpreter) The pandemic has had a huge impact on my income. I used to have a stable job. But now I roam around and can't really earn much money.

RUWITCH: Wu says back home, his father recently bought some sheep. Before the pandemic, he would never have imagined returning where he came from to work as a farmer. But now he's giving serious thought to leaving the city behind and helping his dad raise the animals.

John Ruwitch, NPR News, Shenzhen, China. Transcript provided by NPR, Copyright NPR.

John Ruwitch is a correspondent with NPR's international desk. He covers Chinese affairs.