40 million low-paid workers power China’s smart factories

China’s massive manufacturing machine is being oiled by rural migrant day workers, who earn just slightly more than US$3 an hour, or 24 yuan. Their average working week is a whopping 61 hours, with a monthly take-home pay of 5,444 yuan, or $752.

They rarely have access to social security, such as health care or insurance. Yet they number “around 40 million,” or nearly 32% of the total manufacturing workforce. They are also the backbone of China’s smart factories.

“[Known as] ‘gig workers’ in the manufacturing industry, [they] work on [the] production frontlines without formal labor contracts and without access to basic social security benefits,” Zhang Dandan, of the prestigious Peking University, pointed out.

“With the skill level required for manufacturing workers continuously decreasing, the traditional long-term, stable employment model is being replaced by short-term and gig workers, making ‘gig work’ the primary form of labor in the sector,” she said.

“[But] it is essential to create a dignified and sustainable earnings environment for migrant workers, reduce living costs, and improve flexible retraining opportunities,” Zhang stressed as reported by the Pekingnology website.

Much of this reflects … supply-chain diversification to avoid higher tariffs.

Yue Su at the Economist Intelligence Unit

Behind the news:

• In 2023, the widely respected research academic put youth unemployment under the spotlight when she revealed it was more than 46%, or twice the official figure of 21%.
• The state-run National Bureau of Statistics scrapped reporting the numbers for five months before “revising its methodology.”

Delve deeper: Now Zhang has turned her sights on poorly paid “gig workers.” A cap on wage growth and state subsidies for manufacturers are the bedrock of President Xi Jinping’s economic policy. Social security safety nets are flimsy, to say the least.

Big picture: Yet despite Beijing’s intervention, China’s export juggernaut is slowing down amid growing global trade tensions. The General Administration of Customs reported today that exports in August expanded just 4% compared to the same period in 2024.

Bottom line: “Trade diversion remains evident. Much of this reflects … supply-chain diversification to avoid higher tariffs, a practice also seen during the first US-China trade war,” Yue Su, at the Economist Intelligence Unit, told the AFP news agency.

China Factor comment: Behind the rise of smart factories and industrial robots powered by artificial intelligence lies an underclass in the world’s second-largest economy. So much for the people in the People’s Republic of China.