Giving 100 Million to Companies Running Factories During Chunjeol... China's Desperate Measure

Measures to Boost Economic Growth Rate During Chunjol Period
Subsidies Provided to Companies and Workers to Increase Operating Rates

Overview of the Dongguan factory complex in China [Asia Economy DB]

Some cities in China have decided to provide subsidies to companies operating factories ahead of the Lunar New Year holiday. This is a desperate measure to prevent a decline in economic growth due to reduced factory operation rates during the holiday period. The Hong Kong media outlet South China Morning Post (SCMP) introduced the case of Dongguan, a city in southern China, which has started offering factory subsidies ahead of the Lunar New Year holiday, which is about a month away.

Dongguan, one of China’s export hubs densely packed with factories, plans to provide subsidies of up to 600,000 yuan (approximately 110 million KRW) to manufacturers maintaining industrial production throughout February. Additionally, from the 10th of next month, employees returning to work for eight days will receive a transportation subsidy of up to 300 yuan (about 55,000 KRW) per person.

This year’s Lunar New Year holiday in China begins on February 10. The Lunar New Year is one of China’s major holidays, and this year’s holiday lasts a total of eight days until February 17. Furthermore, the Chinese government encourages adding one day of paid leave, allowing workers to enjoy a golden holiday of nine days. During this extended holiday, urban workers often travel back to their hometowns in the provinces to spend time with their families.

The problem lies in the bleak outlook for China’s economic recovery this year due to the real estate crisis and concerns about deflation (price stagnation). In this context, export cities like Dongguan suffer industrial production losses when workers leave and factories shut down. Ultimately, the city authorities have resorted to the desperate measure of forcibly keeping factories running by providing subsidies to companies.

Regarding this, SCMP pointed out, "Dongguan is the fifth largest region in China by export volume, but it has been struggling recently due to a decrease in overseas manufacturing orders," adding, "The GDP growth rate for the first to third quarters last year was only 2%, marking the lowest level in Guangdong Province, where Dongguan is located."