At least 2.7 million factory workers in southern China could lose their jobs as the global economic crisis hits demand for electronics, toys and clothes, according to industry estimates.
The region has seen massive export-driven expansion in recent years by supplying the world with cheap consumer goods, but rising production costs and falling US and European demand have marked a swift end to the boom.
Now 9,000 of the 45,000 factories in the cities of Guangzhou, Dongguan, and Shenzhen are expected to close before the Chinese New Year in late January, the Dongguan City Association of Enterprises with Foreign Investment estimates.
By then, the association expects overseas demand for products from the three manufacturing hubs to have shrunk by 30 percent, as the knock-on effects of the US housing market collapse and credit crunch filter down to Chinese workers.
"I am afraid it is not going to look good on the Chinese government if the decline of the export-led industries and the unemployment problem continue to worsen," Eddie Leung, the association's president told AFP.
Leung, also a member of the Chinese Manufacturers' Association, said the estimate of 2.7 million job losses was conservative, given that many of the larger factories in Guangdong province employ thousands of workers.
One of them, Hong Kong-listed Smart Union, a major toy manufacturer in Dongguan supplying US giants Mattel and Disney, closed its doors last week, leaving 7,000 workers out of work and with several weeks of back pay owed.