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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