Covid-19 impact and responses: China

Updated on: 4 May, 2020

What is the current situation?

Lack of orders and poor sales are the outstanding difficulties faced by enterprises

On 16 April, the joint defence and joint control mechanism of the State Council held a press conference. Xu Kemin, director of the Department of Industrial Policies and Regulations of the Ministry of Industry and Information Technology, stated that from the middle of February, the textile industry has started to comprehensively promote the resumption of production. For example, the online Light Textile City Trading Platform in Zhejiang Province resumed its business on 10 February, and the offline light textile city market resumed its business on 18 February, ensuring the smooth trade of textile fabrics, and at the same time, also led to the resumption of local printing and dyeing industry. According to the survey of 75000 textile enterprises in 28 key textile industrial clusters in 13 provinces by China Textile Federation, the return rate has reached 90%, and the return rate of employees has reached 86%.

At present, the rapid spread of international epidemic is causing the textile industry – especially small and medium-sized textile enterprises – some difficulties. First, there is insufficient demand. From a domestic perspective, from January to February, the retail sales of clothing, shoes, hats and knitted textiles per unit above the quota in the domestic market fell by 31% year on year. Internationally, since March, a large number of export orders have been delayed or cancelled, and new orders have been greatly reduced. According to the survey results of more than 100 key enterprises conducted by China Cotton Textile Industry Association, 63.6% of the enterprises have insufficient orders. Second, the pressure on the industry to stabilise employment is increasing. The pressure of order reduction is being transmitted upstream along the industrial chain, which will have an impact on the normal operation of the industrial chain of the textile industry, and the employment situation of the industry tends to be severe. Third, the enterprises are experiencing a shortage of funds. Affected by the decline and return of orders, the overstock of raw materials and finished products in textile enterprises has increased, especially in the chemical fibre industry. Due to the fact that continuous production cannot be stopped, it is facing great inventory pressure, and the amount of capital occupied is also increasing.

(Source in Mandarin: http://news.ctei.cn/domestic/gnzx/202004/t20200417_3982617.htm)

Qin Zhihui, deputy director of the Small and Medium Enterprises Bureau of the Ministry of Industry and Information Technology, said the Ministry of Industry and Information Technology issued 20 measures to help small- and medium-sized enterprises return to work, work together to overcome difficulties and guide local governments in providing services for small- and medium-sized enterprises. Relevant monitoring shows that on 24 March, the return rate of small- and medium-sized enterprises reached 71.7%, 42.1 percentage points higher than that on 23 February, and the return rate steadily increased. 

(Source in Mandarin: http://news.ctei.cn/domestic/gnzx/202003/t20200326_3980930.htm)

Most provinces except Hubei are gradually resuming normal life. Domestic travel is not restricted, though some cities require travellers to carry a health certificate issued by a public hospital. Generally speaking, domestic travel is okay.  The central government has decided to reopen Wuhan city as of 8 April, 2020.

According to the data released on 14 April by the General Administration of Customs, the total foreign trade volume of the whole country declined in the first quarter of 2020. In the first quarter of the year, the total foreign trade import and export volume of US dollar was US$943 billion 220 million, down 8.4% from the same period last year, of which exports dropped by 13.3% and imports decreased by 2.9%.

In the first quarter of 2020, China’s textile and clothing exports totalled US $45.26 billion, down 17.7% from the same period of last year, among which US$22.69 billion is textile, down 14.6% compared with the same period last year, and US$22.57 billion is clothing, down 20.6% from the same period last year. 

(Source in Mandarin: http://news.ctei.cn/trade/jckxx/202004/t20200415_3982350.htm)

What are the government policies to support local businesses?

The Chinese government has implemented practical policies to help enterprises overcome the difficulties. For instance, rent, taxes and social security fees can be reduced and postponed. Moreover, eligible enterprises can apply for loans from commercial banks with discounted interest rates. These are general rules, but they can vary from city to city.

What are the government policies and regulations to protect employees – the workers?

Legal references

Payment of Wages Tentative Provisions, Article 12

An employing unit must pay an employee’s wages in accordance with the standards stipulated in the employment contract for any wage-payment period in which there is a work stoppage or production has been suspended for reasons not attributable to the fault of the employee. If such suspension exceeds one wage payment period during which the employee provides normal labour, the remuneration paid to the employee must not be less than local minimum wage standard.

Article 47 of the labour contract law

A Employee shall be paid severance pay based on the number of years worked with the Employer at the rate of one month’s wage for each full year worked. Any period of not less than six months but less than one year shall be counted as one year. The severance pay payable to a Employee for any period of less than six months shall be one-half of his monthly wages.

If the monthly wage of a Employee is greater than three times the average monthly wage of employees in the Employer’s area as published by the People’s Government at the level of municipality directly under the central government or municipality divided into districts of the area1 where the Employer is located, the rate for the severance pay paid to him shall be three times the average monthly wage of employees and shall be for not more than 12 years of work.

For the purposes of this Article, the term ‘monthly wage’ means the Employee’s average monthly wage for the 12 months prior to the termination or ending of his employment contract.

What are local stakeholders doing to lobby their government?

There is little information on this currently.

What are local organisations doing to support and protect workers?

There is little information on this currently.

What have been the responses and requests of business associations to support the industry?

In recent days, the Covid-19 infection has been rampant in Hubei and other areas, which poses a great threat to people’s health.

The Ministry of Personnel and Social Affairs has issued the ‘Guidelines on stabilising labour relations and supporting enterprises in resuming work and production during the prevention and control period of the Covid-19 pandemic’, (hereafter referred to as the ‘guidelines). It is clear that the workers who are unable to take leave during the Spring Festival holiday due to epidemic prevention and control should help to arrange compensatory rest first and be paid overtime wages according to law.

Are you still paid after being quarantined? Payment as usual during isolation period.

The guidelines are clear. For employees who cannot provide standard labour due to isolation, according to law, the enterprise shall pay their wages according to normal labour after the isolation period. Employees who need to stop working for treatment shall be paid according to the relevant provisions of the medical period.

The notices issued by Beijing, Shanghai, Tianjin, Hubei, Guangdong, Zhejiang and other provinces (autonomous regions and municipalities) also clearly stated that enterprises with cases of pneumonia, suspected patients and those who have had close contact with Covid-19 during the isolation treatment period or who are under medical observation, as well as workers who could not provide standard labour due to the government’s implementation of separation measures or other emergency measures, the enterprises should deem that normal labour is provided and workers should be paid, and the labour relationship shall not be terminated.

According to the guidelines, for employees who can’t provide standard labour or other standard labour after using all kinds of leave, during the delayed return-to-work or non-return period affected by the epidemic, the enterprise should consult with the employees according to the relevant provisions of the state on wage payment during shutdown period, and pay the wage according to the standard stipulated in the labour contract within one wage payment cycle. If the shutdown occurs for more than one cycle, living expenses shall be paid to employees according to the relevant provisions.

How about the salary for working at home? Payment according to normal working period.

When a factory closes due to Covid-19, it should follow article 47 of the PRC labour contract law for the settlement of its employees.

After the outbreak, the China National Textile and Apparel Council (CNTAC) arranged the inventory, production capacity and enterprise layout of national masks and medical protective clothing, and reported the information to relevant ministries and commissions. Textile enterprises overcome difficulties, organise production and ensure the supply of important materials, which reflects the rapid response ability of textile enterprises and the responsibility of serving society.

(Source in Mandarin: http://news.ctei.cn/domestic/gnzx/202001/t20200131_3975022.htm)

What are international brands doing to support suppliers and protect workers?

There is little available information on this currently.


Relevant links for more information

Ministry of Health
Ministry of Labour

In Mandarin for factories and workers:
UNICEF – Covid-19
UNICEF – Advice on novel coronavirus
UNICEF – Covid-19: What parents should know
Chinese Center for Disease Control

In English:
UNICEF – Covid-19
UNICEF – Advice on novel coronavirus
UNICEF – Covid-19: What parents should know
UNICEF, ILO and UN Women’s Family Friendly Policy Guidance with key steps employers can take in the context of Covid-19