Exports fall in China's richest county.

Kun­shan, a county 50km from Shang­hai in China’s Jiangsu province, used to boast wages up to 30 per cent higher than in less-developed interior areas, thanks to the thou­sands of con­tract man­u­fac­tur­ers that assembled crit­ical com­pon­ents there. With almost 1mn people, Kun­shan has 1,529 export-focused man­u­fac­tur­ers from Taiwan alone and is known as China’s wealthiest county. Kun­shan’s mal­aise reflects the chal­lenges faced by China’s export-led eco­nomy as it emerges from three years of pan­demic restric­tions and as poli­cy­makers struggle to find another growth engine to off­set a decline in for­eign trade. The Biden admin­is­tra­tion has sought to secure sup­ply chains of crit­ical elec­tron­ics, such as those assembled in Kun­shan, on national secur­ity grounds, press­ing Amer­ican com­pan­ies and those of its allies to reshore oper­a­tions and restrict trade with China.

«Kun­shan owes its rise to prom­in­ence to the influx of Taiwanese man­u­fac­tur­ers,» said Dan Wang, chief China eco­nom­ist at Hang Seng Bank China. Wages at Taiwanese man­u­fac­tur­ers in Kun­shan have fallen to less than Rmb19 an hour from more than Rmb25 a year ago. In addition, Fox­conn Kun­shan, the lead­ing Taiwanese Apple con­tract man­u­fac­turer, now requires applic­ants for entry-level pos­i­tions to be under 40 years old, com­pared with 45 a year ago. «We don’t have enough pos­i­tions for so many job­seekers,» said Chen Jian, a recruiter who works with con­tract man­u­fac­tur­ers in Kun­shan.

As demand for low-mar­gin man­u­fac­tur­ing dwindles, Kun­shan has begun court­ing for­eign investors with higher tech­no­lo­gical demands and focus­ing on local sales to spur growth. The strategy has attrac­ted some com­pan­ies thanks to Kun­shan’s estab­lished sup­ply chain and prox­im­ity to Shang­hai, China’s largest high-end con­sumer mar­ket and hub for tech research and devel­op­ment. Bernd Reit­meier, the founder of Star­tup Fact­ory, a Kun­shan-based busi­ness incub­ator for European man­u­fac­tur­ers, fore­cast mem­ber­ship to grow this year as com­pan­ies sought to tap the world’s second-largest eco­nomy. « As a con­sequence, they stay in Kun­shan,» said Reit­meier.

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