Beneath China's resilient economy, a life of pay cuts and side hustles
BEIJING--Chinese state firm employee Zhang Jinming makes up for a 24% cut to his salary by delivering food for three hours every night after work and on weekends - and hopes he can avoid awkward encounters with colleagues.
'Being a part-time delivery person while working for a state-owned enterprise isn't exactly considered respectable,' said Zhang, whose real estate firm pays him 4,200 yuan ($585) per month, down from 5,500 yuan.
While China has supported economic growth by keeping its ports and factories humming, the lack of real demand has hit profits, in turn squeezing workers like Zhang through wage cuts and forcing them to moonlight.
'There's just no other way,' added the 30-year-old, who rides his scooter until 11.30 pm, making 60-70 yuan per evening. 'The pay cut has put me under huge pressure. Many colleagues have resigned and I took over their workload.'
China's economy posted robust 5.2% growth in the second quarter, showing its export-heavy model has so far withstood U.S. tariffs. But beneath the headline resilience, cracks are widening.
Contract and bill payment delays are rising, including among export champions like the autos and electronics industries and at utilities, whose owners, indebted local governments, have to run a tight shop while shoring up tariff-hit factories.
Ferocious competition for a slice of external demand, hit by global trade tensions, is crimping industrial profits, fueling factory-gate deflation even as export volumes climb. Workers bear the brunt of companies cutting costs.
Falling profits and wages shrank tax revenues, pressuring state employers like Zhang's to cut costs as well. In pockets of the financial system, non-performing loans are surging as authorities push banks to lend more.
For the most part, the lopsided nature of growth in the world's second-largest economy is a product of policies that favor exporters over consumers.
Economists have long urged Beijing to redirect support to domestically focused sectors, such as education and healthcare, or boost household consumption - for instance, by bolstering welfare - or risk a slowdown in the second half of the year.
Max Zenglein, Asia-Pacific senior economist at the Conference Board of Asia, describes China as a 'dual-speed economy' with strong industry and weak consumption, noting the two are related.
'Some of the economic challenges including low profitability and deflationary pressure are largely driven by continued capacity expansion in the manufacturing and technology sectors,' said Zenglein.
'What's unfolding now' in the trade war with the U.S. is 'coming back home as a domestic issue.'
HIT TO INCOMES
Frank Huang, a 28-year-old teacher in Chongzuo, a city of more than 2 million people near the Vietnam border, in the indebted Guangxi region, says his school has not paid him in two-to-three months, waiting for authorities to provide the funds.
'I can only endure, I don't dare to quit,' said Huang, who relies on parents when his 5,000 yuan paycheck doesn't arrive. 'If I were married with a mortgage, car loan and child, the pressure would be unimaginable.'
Another teacher from Linquan, a rural county of 1.5 million in eastern China, said she is only receiving her basic 3,000 yuan monthly salary. The performance-based part of her pay, usually about 16%, 'has been consistently delayed.'
'After I pay for gas, parking and property management fees, what's left isn't enough for groceries,' said the teacher, who only gave her surname Yun for privacy reasons.
'I feel like begging,' added Yun. 'If it weren't for my parents, I would starve.'
There is no data on payment delays in the government sector. But among industrial firms, arrears have grown quickly in sectors with a strong state presence, either through industrial policy or - like in utilities - through direct ownership.
Arrears in the computer, communication and electronic equipment sector and in autos manufacturing - two priorities for China's economic planners - rose by 16.6% and 11.2%, respectively, in the year through May, faster than the 9% average across industries. Overdue payments were up 17.1% and 11.1% in the water and gas sectors.
These figures suggest liquidity stress and are a side-effect of authorities prioritising output over demand, said Minxiong Liao, senior economist at GlobalData.TS Lombard APAC.
'The result should be slower growth for these champion sectors,' in the future, he said.
SPENDING DEFERRED
With incomes under pressure, Beijing is struggling to meet its pledge to lift household consumption and worries are growing that persistent deflation will further damage the economy as consumers defer spending.
Huang Tingting quit her waitress job last month after business at her restaurant - and most shops nearby - plummeted in April, at the height of U.S.-China trade tensions. Responding to plunging revenues, the restaurant owner asked staff to take four unpaid leave days every month.
'I still have to pay rent and live my life,' said the 20-year-old from the eastern Jiangsu province, an export powerhouse that's outpacing national growth, explaining why she quit.
In the past, though, she could find another restaurant job in a day or two. This time, she's been unemployed since June. One recruiter told her a job she applied for had more than 10 other candidates.
'The job market this year is worse than last year,' said Huang.
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The China-U.S. trade war is often reduced to a dispute over cheap exports, but the real fault line runs deeper. China has built a powerful industrial strategy on the backs of low-cost labor and state-backed incentives, successfully attracting advanced multinationals and bringing their technology and supply chain resources into the country. While the United States outsourced its basic manufacturing, China turned so-called 'low-end' jobs into a launchpad for dominating high-value industries. This strategy has worked. BYD, once a low-tier battery maker, is now a top global electric vehicle manufacturer, beating Tesla in worldwide EV sales. Apple, for its part, poured billions into China – not just in assembly lines, but in R&D. As journalist Peter McGee documented in 'Apple and the Transformation of Chinese Manufacturing,' Apple's strict quality and engineering standards forced Chinese suppliers to level up. 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These are not isolated incidents, but are structural features of a model that exploits rural migrant workers, tolerates weak enforcement of labor laws, and prohibits independent unions. Global companies continue to profit from it. This exploitation does not just serve short-term commercial interests. It underpins China's ambitious vision of the 'great rejuvenation of the Chinese nation' and advancing its global hegemonic strategy of technological dominance and leadership. Even as parts of manufacturing move to Southeast Asia, those operations remain closely tethered to Chinese supply chains. The low-cost advantage remains China's unshakable core. If the U.S. wants to reduce its dependency and rebalance trade on fairer terms, it cannot ignore the labor question. It must confront China's labor governance head-on – even if doing so challenges American business interests in the short term. The Chinese government, for all its claims in its Constitution and the Communist Party's charter that China is a 'socialist state' that is 'led by the working class,' has built its economic ascent on the backs of exploited workers. While it publicly touts its commitment to workers' well-being, it has never admitted to the systemic nature of labor violations. Instead, the party-state continues to sidestep the issue through an official narrative of 'striving for workers' well-being,' and blame is deflected to multinational corporations. Many Chinese citizens, including some government officials, genuinely believe that the CCP's system can improve workers' lives. The structural roots of labor exploitation, inherent in the party's governance and economic model, are obscured. Labor rights activism thus becomes a sore subject for the government. To them, it is not just about a call for better wages or working conditions, but a direct challenge to the CCP's self-image. It exposes the ideological gulf between its promises and the lived experience of Chinese workers. If party leaders deny the existence of labor exploitation, they are telling an outright lie that will anger many workers; if they address the issue, it legitimizes that reality is at odds with the CCP's charter. This is precisely why labor advocates are treated with suspicion and often repression – but also some degree of caution. During the 2015 '709 Crackdown,' China jailed dozens of human rights lawyers, but took a softer approach with labor activists, quietly releasing them or assigning them jobs after detention to avoid international attention further escalating the issue. The goal was clear: to suppress attention and not provoke an international firestorm. A similar pattern played out in 2025, when Brazil sued BYD for alleged forced labor. 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Labor, by contrast, is a pressure point the Chinese government is less prepared to resist, precisely because it implicates both the CCP's legitimacy and its economic model. Labor issues directly affect the immediate interests of the Chinese people, which concerns the government, and international labor standards can thus serve as an effective mechanism to expose the deeply rooted structural flaws in China's governance model. This is the moment for the United States and its allies in Europe to unite around labor standards as a strategic pillar of trade policy. As China-EU tensions continue to simmer, a coordinated, transatlantic approach, through shared standards, trade mechanisms, and enforcement frameworks, could significantly increase leverage over China's labor practices. This strategy not only advances sustainable global supply chains but also balances immediate commercial interests with long-term labor equity, benefiting workers in both the United States and China. Yes, there will be obstacles: political division among allies, corporate resistance, and China's likely counterattacks. But the stakes are too high to ignore. Fair labor standards not only strengthen global supply chains; they offer a pathway to a more just global economy, one where competitiveness does not rely on exploitation. Reshaping the rules of global trade will require more than rhetoric. It will require placing workers – American, Chinese, and others – at the center of policy. And that begins with recognizing that labor is not a side issue. It is the issue.
