Impact of Long Holiday on Chinese Companies: Bankruptcy Surge and Rising Job Search Challenges Following the Fourth Plenary Session of the CPC Central Committee

China’s Economic Woes deepen: Factory Closures and Unpaid Wages Spark concerns

Beijing – A wave of factory closures and reports of employers absconding with unpaid wages are casting a long shadow over China’s economic outlook, raising questions about the accuracy of recent government pronouncements of stability and growth. The situation is unfolding as the Communist Party of China (CPC) prepares for the Fourth Plenary Session of the 20th Central Committee,scheduled from October 20 to 23.

Employees Return to Empty Factories

On October 8, an employee at a mold manufacturing company in Liupanshui, Guizhou Province, identified only as Chunming, discovered that his workplace had abruptly ceased operations. He and over 20 colleagues are collectively owed an estimated five to six million yuan in back wages. according to Chunming, the company owner allegedly plans to relocate operations to Cambodia, offering workers only a promise of eventual payment without compensation.

“The boss simply vanished,” Chunming stated. “We were left with no warning and no explanation.” this incident is emblematic of a broader trend,with anecdotal evidence suggesting that numerous factory owners are taking advantage of national holidays to shut down operations and avoid financial obligations.

A Cascade of Bankruptcies

The economic strain is visible in several key industrial hubs. In Guangdong Province, “Emma Automobile Industry,” a Dongguan-based manufacturer with 11 years of operation, suspended production on October 1. Jiamiai Home Furnishing Company in houjie, Dongguan, was recently declared bankrupt, burdened with 12.38 million yuan in debt against just 62,000 yuan in assets. Further, Wutongshu Doors and Windows Company, a prominent building materials supplier in Foshan, announced its closure on October 7.

The crisis extends beyond manufacturing. E-commerce businesses are also struggling, with reports of merchants liquidating assets at steep discounts during the National Day holiday.Electric bicycle retailers in Guangzhou are similarly facing hardship, with one business owner reporting minimal sales since reopening on October 3.

Company	Location	Industry	Status
Emma Automobile Industry	dongguan,Guangdong	Automotive Manufacturing	Suspended Production
Jiamiai Home Furnishing	houjie,Dongguan	Furniture Manufacturing	Bankrupt
Wutongshu Doors and Windows	Foshan,Guangdong	Building Materials	Closed

Official Optimism Contrasts with Public Sentiment

Despite these mounting challenges,state media,including the “People’s Daily,” recently published a series of articles touting China’s economic resilience and extolling the virtues of “Xi Jinping’s Economic Thought.” However, these pronouncements are increasingly at odds with the experiences of ordinary citizens.

Xie Tian, an economics professor at the Aiken School of Business at the University of South Carolina, suggests that the CPC’s attempts to project an image of stability are a deliberate effort to mislead the public.He argues that the government’s suppression of dissenting economic analyses further obscures the true extent of the crisis.

Local Experiences Reflect Broader Trends

Reports from across the country corroborate this pessimistic outlook. A cigarette vendor in Wuhan, Hubei Province, noted a steep decline in sales and profit margins, while a Zhejiang-based e-commerce entrepreneur described a drastic downturn in business. Even in typically robust sectors,like electric bicycles,retailers in Guangzhou are struggling to stay afloat.

The plight of workers is especially acute. One employee in Wuxi, Jiangsu Province, reported unpaid wages and a request from her employer for a personal loan, while an unemployed resident of Zunyi, Guizhou, described the dire employment situation in his region.According to the National Bureau of Statistics of China, the urban unemployment rate in September 2023 stood at 5.0% [National Bureau of Statistics of China]. However, anecdotal evidence suggests the number is significantly higher, especially in affected industrial areas.

Did You Know? The Chinese government’s control over details makes it arduous to obtain accurate economic data, leading to skepticism about official statistics.

Pro Tip: For investors,closely monitoring regional economic indicators and anecdotal reports from the ground can provide a more nuanced understanding of China’s economic realities.

Yokogawa, an expert on china issues, pointed out the recent series of optimistic articles in state media were authored by the Central Financial and Economic Commission, which is led by Xi Jinping. He viewed this as an attempt to control the narrative and reassure the public despite prevailing economic difficulties.

Understanding China’s Economic Challenges

china’s current economic slowdown is a complex issue rooted in several factors, including a property market crisis, declining exports, and the lingering effects of the Covid-19 pandemic. The country’s reliance on investment-led growth and its aging population further exacerbate these challenges. Furthermore, increasing geopolitical tensions and trade disputes add uncertainty to the outlook.

Frequently Asked Questions About China’s economy

• What is causing the factory closures in China? Declining domestic and international demand,coupled with rising costs and debt,are driving many businesses to close.
• Are China’s official economic statistics reliable? Many analysts question the accuracy of official data, citing government control over information and a tendency to present an overly optimistic picture.
• How will these economic challenges affect global markets? A slowdown in China’s economy could have significant repercussions for global trade,commodity prices,and supply chains.
• What is the role of the Communist Party in addressing these issues? The CPC is attempting to stabilize the economy through a combination of fiscal stimulus and regulatory adjustments, but its interventions are ofen hampered by political considerations.
• What are the long-term prospects for China’s economy? The long-term outlook remains uncertain, with predictions ranging from a continued slowdown to a potential recovery depending on the effectiveness of government policies and external economic conditions.

what do you think are the biggest risks to China’s economic stability? Do you believe the government’s optimistic assessments, or do you share the concerns of workers and business owners on the ground?

Share your thoughts in the comments below.

What specific policy implementation challenges are hindering the translation of the Fourth Plenary Session’s pro-private sector directives into tangible economic benefits for Chinese companies?

The Post-Holiday Economic Landscape: A deep Dive

The extended Golden Week holidays in China, traditionally intended to boost domestic tourism and consumption, are increasingly revealing a darker side: a surge in bankruptcies among small and medium-sized enterprises (SMEs) and a corresponding spike in job seeker activity. This trend, notably pronounced following the Fourth Plenary Session of the CPC Central Committee, signals deeper structural issues within the Chinese economy. The session’s focus on strengthening the private sector appears to be struggling to offset existing pressures.

Bankruptcy Rates: A Concerning trend

Recent data indicates a notable uptick in company bankruptcies promptly following the eight-day National Day holiday in early october 2025. While official figures are often opaque, reports from credit rating agencies and business information platforms paint a worrying picture.

* SME Vulnerability: SMEs,particularly those in the manufacturing,retail,and hospitality sectors,are disproportionately affected. These businesses often lack the financial reserves to withstand prolonged periods of economic slowdown or unexpected disruptions.

* Debt Burden: High levels of corporate debt, exacerbated by years of easy credit, are a major contributing factor. Many companies entered the holiday period already financially strained, and the lack of revenue generation during the break proved fatal.

* Regional Disparities: provinces heavily reliant on export-oriented manufacturing, like Guangdong and Zhejiang, are experiencing higher bankruptcy rates then those with more diversified economies.

* Specific Sectors Hit Hard: The tourism sector, despite the holiday’s intention to bolster it, saw mixed results. While domestic travel increased, spending per tourist remained relatively low, failing to provide sufficient relief for many businesses.Restaurants and entertainment venues also reported disappointing revenues.

Job Search Challenges: A Growing Workforce Seeking Opportunities

The post-holiday period has also witnessed a dramatic increase in job seeker activity across major online recruitment platforms. This surge is directly linked to the wave of bankruptcies and company restructurings.

* Increased Competition: The influx of job seekers has intensified competition for available positions, driving down wages and making it harder for individuals to find suitable employment.

* Skill Mismatch: A significant portion of the newly unemployed workforce lacks the skills required for emerging industries, creating a skills gap that further complicates the job search process.

* Youth Unemployment: Youth unemployment remains a critical concern, with rates consistently exceeding the national average. The latest wave of layoffs has disproportionately impacted young workers and recent graduates.

* platform Data: Leading Chinese recruitment platforms like Zhaopin.com and 51job.com reported a 35% increase in registered job seekers in the two weeks following the holiday compared to the same period in 2024.

The Fourth Plenary Session & Policy Implications

The Fourth Plenary Session of the CPC Central Committee, held in September 2025, emphasized the importance of supporting the private sector and fostering a more favorable business surroundings. However,the post-holiday economic realities suggest that these policies are not yet translating into tangible benefits for many companies.

* Policy Implementation Lag: The implementation of new policies often faces bureaucratic hurdles and regional variations, delaying their impact on the ground.

* Structural Issues: The underlying structural issues – including high debt levels,overcapacity in certain industries,and a slowing global economy – require more comprehensive and long-term solutions.

* Local Government Pressure: Local governments, frequently enough prioritizing short-term economic growth over long-term sustainability, might potentially be reluctant to enforce stricter regulations or address underlying problems.

* Focus on High-Quality Growth: The session’s emphasis on “high-quality development” requires companies to innovate and upgrade their technologies, a challenge for many SMEs lacking the resources and expertise.

Impact on Foreign Investment & Supply Chains

The rising bankruptcy rates and job search challenges are also raising concerns among foreign investors and impacting global supply chains.

* Supply Chain Disruptions: Bankruptcies among key suppliers can disrupt supply chains, leading to delays and increased costs for multinational corporations.

* Investment Hesitancy: The uncertain economic outlook is prompting some foreign investors to reconsider their investment plans in China.

* Relocation Considerations: Some companies are exploring options to diversify their supply chains and relocate production to other countries with more stable economic environments.

* Geopolitical Implications: The situation adds another layer of complexity to the ongoing geopolitical tensions between China and other major economies.

Case Study: The Collapse of