A ‘China Shock’ of Sorts Hits a Part of China

Commentary

Americans have long regretted what they call the “China shock”—how beginning in the 1980s, the United States lost manufacturing production and jobs to China’s powerful competitive pricing edge. The “shock” cut across almost all industries, from steel to plastic toys, from chemicals to shoes and clothing. The American furniture industry was all but wiped out. Devastation rained on towns like Hickory, North Carolina, where the American furniture industry was once centered.

Now, it seems, some Chinese manufacturing efforts are suffering a shock of their own. Most of the evidence is still anecdotal. An earlier piece in this space reviewed the woes of plastic toy production. A worse fate seems to have befallen Chinese furniture production. It has lost its once commanding low-cost competitive edge, not to American producers, but to lower cost efforts in Mexico, for instance, and elsewhere in Asia, notably Vietnam. Lower wages in these alternative locations have undercut Chinese pricing and, along with the Trump tariffs that went into effect early in 2025, have erased China’s once-seemingly insurmountable edge in the U.S. market. In a clear parallel to what happened in Hickory, North Carolina, the center of Chinese furniture production, the city of Foshan, has suffered.

Over the course of 2025, China’s furniture exports to the United States fell some 36 percent. Manufacturers in Foshan polled by the Wall Street Journal said that the slide has continued this year, though no composite data yet exists. The loss of contracts with Walmart and Home Depot have had a huge effect, Chinese producers say, but equally troubling is the shift in production away from China toward other countries, Vietnam in particular.

The Trump tariffs, presently between 25 and 30 percent on China-made furniture and kitchen cabinets, are clearly a big part of the problems besetting Foshan’s factories and others like them. Not only have the tariffs prompted American buyers to source elsewhere, but they have encouraged Chinese producers to migrate their operations out of the country to locales where the American tariffs do not apply.

Washington’s still relatively recent actions, however, are far from the whole story. More fundamental than tariffs are the huge wage differences between China and its competition in the so-called global south. China’s minimum wage, just to take one indicator, is more than three and a half times that of Vietnam, for instance. Even if the United States were not imposing tariffs, this kind of a difference would inspire a migration of production out of the country, just as significant wage difference fed the migration of American production to China over the prior 30 years. The effect is evident in the pattern of global exports of China-made furniture. It had been trending gradually downward since the highs of 2021, long before Trump’s tariffs of 2025 went into effect.

Foshan’s problems go deeper still. Domestic sales of furniture—household products in general—have also suffered from the ongoing property crisis in China, which has depressed home sales and residential real estate values across the entire country and accordingly domestic sales of furniture, kitchen cabinets, and related items. Most recently, the fighting in the Persian Gulf has retarded sales to the Middle East and to Europe, in the former as a direct effect of the fighting and in the latter because the rising cost of fuel has cut significantly into household budgets.

With luck, the fighting will end soon, the price of fuel will return to levels of earlier this year, and a couple of the weights on China-furniture production will lift. Even so, this Chinese industry, like others, will still face the drag of China’s persistent property crisis and the intense competition from Vietnam, Mexico, and other lower-cost areas. Nor, despite the seeming friendliness between Trump and Xi when they met in the middle of May, are American tariffs likely to lift soon.

It is indicative how the Chinese furniture manufacturers in Foshan are talking as though they will have to continue to deal with this ‘shock’ over the long term, much as people did in Hickory, North Carolina, a couple of decades ago. The factory owners and managers are considering upgrading their product to find higher-end buyers than previously and they are talking about direct sales through Amazon and others. There is also talk about an emphasis on design instead of production. They had similar conversations in Hickory late in the last century, and to no avail. Even if Foshan’s alternatives bear fruit, they will not support the kind of employment that contracts from Home Depot and Walmart once did.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.