Sock City’s Decline Reveals Economic Dilemma
Yiwu, known as “the Sock City”, is suffering amidst a broader slowdown in Chinese manufacturing, despite windfall orders from the Syrian army. From Tania Branigan at The Guardian:
The foolish man built his house upon sand; the wise man built his house on a rock. The ambitious entrepreneurs of Datang chose a sturdy nylon and wool foundation. “People always need socks,” points out Xu Leile, whose company clothes the feet of the British and US armies, European hikers and pampered pet dogs.
[…] Last year, Datang made roughly two pairs of socks for every person on earth. Long and short, Argyle or polka-dotted, they cram the stores of the nearby wholesale market. In Xu’s spacious new factory, the shelves are stacked with huge reels of red, blue and orange thread. But ask Xu about the future and he grimaces. “I’m very worried. This year is much worse than 2008-9,” he says.
[…] Yet, says Patrick Chovanec of Tsinghua University’s School of Economics and Management, the outlook is not uniformly negative: “This is an economic adjustment and, in the long run, will be good for China and the world, but it doesn’t mean it won’t be painful.”
Officials and analysts have long warned that the Chinese economy is unsustainable; that the years of double-digit growth were fuelled by investment and exports, and that rebalancing and reform were desperately needed.