China weathered Trump’s tariffs – but the Iran war is taking a toll

Amidst the quiet corridors of Foshan’s bustling industrial district, where workers gather under a tree in the shadow of storefronts touting temporary factory roles, a sense of weariness lingers. One man, reluctant to share his name, laments, “No-one grasps the reality of our daily grind.” Another, with cautious hope, urges, “Please help us,” a rare appeal to a foreign reporter. Their lives are defined by relentless labor, with meager earnings barely sustaining families abroad. This struggle, part of a broader transformation in Chinese manufacturing, has intensified since the US-Israel conflict over Iran disrupted global markets.

Before the Middle East turmoil, China’s economy faced challenges of its own. Slower growth and rising unemployment were already strains when Trump’s tariffs struck last year. Yet, the nation held firm, reporting GDP growth of approximately 5% and boosting export volumes. Still, underlying frustrations persist, now compounded by the war’s ripple effects. Factory orders, production costs, and employment stability are all feeling the strain.

In Guangdong’s southern industrial heart, the disparity is stark. A bright red sign advertises hourly wages of 18 to 20 yuan, equivalent to just a few dollars. “I plan to search for better opportunities elsewhere,” says a worker from a rural province, weary of persistent uncertainty. Many are over 40, their livelihoods tethered to an industry in flux. Beijing has increasingly called for an end to the war, leveraging its oil reserves and leadership in renewables to shield itself from fuel price shocks.

The war’s impact is evident in Guangzhou, a major fabric hub near Foshan. Streets teem with motorbikes hauling colorful textiles, while trucks and vans weave through crowds. Traders, though, face a grim reality: oil-driven petrochemicals are now more expensive, forcing a 20% cost hike. “Fewer orders are coming in,” one trader explains over tea, as fabric rolls accumulate in storage. Passing the burden to customers is tough, especially for those operating on narrow profit margins.

Yet, amid the gloom, there is resilience. At the Canton Fair, manufacturers greet global buyers in expansive halls. Humanoid robots perform cheerful gestures as visitors snap selfies. This scene reflects the China leaders aim to showcase—a forward-looking nation investing in technology, while the US grapples with Middle Eastern conflicts. Displays of AI glasses, robotic climbing gear, and everyday gadgets like vacuum cleaners and espresso machines highlight innovation. Their prices, however, are climbing, driven by plastic reliance, which ties to oil.

Chinese EV producers have emerged as a bright spot. March saw exports of 350,000 units, a 30% surge from February and a 140% jump from the previous year, per the Chinese Passenger Car Association. Despite global disruptions, demand for electric vehicles remains strong, underscoring China’s strategic advantage in this sector. The war has accentuated this edge, as fuel shortages reshape industries, leaving EVs as a beacon of hope.

“Costs have gone up around 20%,” says an unnamed trader, organizing fabric rolls. “It’s hard for those already operating on slim margins.”