Chinese Export Factories Hit Pause Amid Tariff War Fallout, Signaling Deeper Economic Woes

The intensifying U.S.–China tariff war is beginning to leave a visible dent on China’s export-driven economy, with major factories suspending operations as orders dry up and uncertainty mounts.

Dongguan Dehong Electrical Appliances Co. Ltd., a veteran export manufacturer based in Guangdong Province, has halted production for at least a month, citing a drop in international orders and an increasingly difficult external environment due to rising U.S. tariffs. The company, known for producing household appliances exclusively for the European and American markets, informed employees they would be on paid leave from April 11, offering immediate settlements for those choosing to resign.

According to The Epoch Times, Dongguan Dehong’s shutdown is just one instance in a growing trend across China’s major export provinces such as Zhejiang, Jiangsu, and Guangdong. Reports indicate several foreign trade companies are scaling back operations or placing workers on indefinite leave as demand from the West dwindles.

“This is not just a temporary disruption—it marks the beginning of a structural decline,” U.S.-based economist Davy J. Wong told The Epoch Times. He explained that Dongguan, once a thriving hub of original equipment manufacturing (OEM) for global brands, is now facing a slowdown that mirrors the broader contraction of China’s export sector.

Wong noted that although companies like Dongguan Dehong have not filed for bankruptcy, they are in a “semi-dormant” state, with most employees laid off and operations reduced to a trickle. These businesses remain technically open, but their economic contribution is minimal—and they’re often invisible in official statistics.

The broader implications of this industrial retreat stretch beyond economics. Wong believes the U.S. is leveraging the tariff war to reshape the global supply chain—one anchored in “universal values, common beliefs, and a shared legal system.” If China fails to align with this new framework, it risks being sidelined from global trade.

Sun Kuo-hsiang, a professor at Taiwan’s Nanhua University, warned that China could respond with non-economic measures—including increased military or diplomatic tensions—further inflaming the geopolitical climate. Nevertheless, he acknowledged the possibility of eventual negotiations to prevent deeper economic fallout for both sides.

Meanwhile, former U.S. President Donald Trump signaled on April 22 that while current tariffs on Chinese imports might be reduced, they will “not go to zero,” maintaining pressure on Beijing.

Internally, Wong argues that China’s economic troubles are more systemic than external. The property sector, ballooning local government debts, and the replacement of high-value Western orders with low-margin deals in Asia and Africa are keeping the economy on life support—barely.

“The Chinese economy is shrinking in silence,” Wong concluded. “And that’s the most dangerous kind of collapse—because it’s quiet, gradual, and difficult to reverse.”

Originally reported by The Epoch Times