China's Workers Face Manufacturing Downturn

China's giant manufacturing sector is starting to slow down and is affecting thousands of factories already fighting for survival.

China's export growth is seen slowing to two-year lows of just 11 percent in November, well off the year's peak of 38 percent.

Exports to the European Union, China’s biggest customer, fell 18 percent by October.

A report released by ManpowerGroup on Tuesday predicts the net employment rate for next year will be dropping dramatically.

[Francois de Yrigoyen, Deputy GM, ManpowerGroup China]:
"The net employment outlook is 17 percent for China, which means that there's still growth in the intention of hiring in China, but you have to understand that this is much lower than in the past. Quarter per quarter this has been decreasing steadily for the last five quarters.”

Manufacturers are already moving away from the coast to China's poorer inland in search of cheaper labor.

China's Communist leaders fear unemployment amongst the country's tens of millions of poor rural migrant could lead to social instability.

Already, a wave of industrial disputes has hit factories around the country.

Last week, hundreds of workers at a factory owned by Singapore's Hi-P International went on strike for a week on fears that their plant would relocate, triggering massive layoffs.

Danny Lau, chairman of Hong Kong's Small and Medium Enterprises Association, whose members include China factory owners, says factories already report a 15 percent annual drop in orders.

[Danny Lau, Chairman, Small & Medium Enterprises Assoc.]:
"Hopefully we can go up a little bit, but definitely not next year. Even if the debt problem has been solved, still the recovery will take some time."

The downturn has not yet reached the scale of that in late 2008 and 2009, when the global financial crisis caused China's exports to seize up.