Toy factory closes; thousands of workers protest... The shadow of the U.S.-Iran war seeps into China's economy - 경향신문

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At a toy factory in Yulin, Guangxi, in southwestern China, about 5,000 workers are protesting to demand payment of back wages./yesterday Instagram

On the 22nd, at a toy factory in Yulin, Guangxi, in southwestern China, about 5,000 workers began protesting to demand payment of back wages. They are workers from plants operated by Hong Kong-based Washing Toys. On the 20th, Washing Toys announced it would close four factories in Yulin. It is said that around 10,000 have been pushed to the brink of unemployment.

A factory worker surnamed Li told Radio Free Asia (RFA) that when the company shut the Changqing Toy Factory in Dongguan, Guangdong, late last year, it did not pay the legally required compensation in full, and that, worried it would respond the same way this time, thousands took to the streets to protest. The demonstrations continued for three days through the 25th, but there were no clashes. A website that documents protests in China posted scenes of workers peacefully demonstrating with police deployed at the scene, chanting slogans such as "Give back the money we earned with our sweat and blood." It has not been reported whether management drew up a clear compensation plan as a result of the protests.

The decisive reason for the plant closures was reportedly the sharp rise in the price of plastics, a key raw material for toys. According to RFA, in its layoff notice Washing Toys said, "In recent years, U.S.-China trade tensions have intensified and the overseas business environment has changed, and unpaid receivables from overseas customers have caused financial difficulties, so as of today we are suspending all business operations." Already battered by the U.S.-China trade war last year, the U.S.-Iran war has dealt an additional blow.

The Chenghai Toy Association in Shantou, Guangdongknown as the hub of China's toy industry, which is said to produce one-third of the world's toysstated in early last month that, due to the fallout from the U.S.-Iran war, soaring plastic prices could trigger hoarding and panic.

Sina Finance, a Chinese business outlet, reported that as of late March the price of plastic raw materials had risen 20%, and that one Shanghai company raised the price of figures it supplies to Japan from 450 yen (about 4,000 KRW) to 800 yen (7,000 KRW). Plastic prices are said to have climbed further this month.

The Yulin factory workers' protests are being interpreted as a sign that the shadow of the U.S.-Iran war is growing darker over China's economy as well. China has been regarded as comparatively resilient to rising oil prices thanks to its large strategic reserves and a high share of renewable energy. But as the price of plasticsmade from oil by-productsrises and supply chain disruptions persist, pressure is mounting first on small and mid-sized factories.

China announced that its economy grew at an annual rate of 5.3% in the first quarter. However, most of the momentum was concentrated in January and February. In March, retail sales rose just 1.7% from a year earlier, leading inventories to build up. Auto sales have also weakened recently. According to the China Passenger Car Association, from the 1st to the 19th of this month, retail sales of passenger cars in China plunged 26% from a year earlier.

Alicia Garcia-Herrero, Chief Economist for the Asia-Pacific at Natixis, told The New York Times (NYT) that growth is slowing and that China may find it difficult to meet its growth target of more than 4.5% this year.

Chinese authorities have repeatedly called for the Strait of Hormuz to be kept open. Fu Cong, China's ambassador to the United Nations, said at a UN meeting on maritime security on the 28th that "the fundamental cause of the strait's blockade is that the United States and Israel carried out illegal military actions against Iran," adding that "maintaining the security, stability, and smooth passage of the (Hormuz) region conforms to the common interests of the international community."

On the 20th, Chinese President Xi Jinping spoke by phone with Saudi Arabia's Crown Prince Mohammed bin Salman, saying that "it is necessary to normalize operations through the Strait of Hormuz."