The turning point of Lewis, marking the shift from surplus labor to labor shortage, indicates that during industrialization, as rural surplus labor gradually moves into non-agricultural sectors, the availability of such labor decreases and eventually dries up. This concept was introduced by Nobel Prize-winning economist Arthur Lewis in his population flow model. On February 16, the Dongguan model faced a red alert. After a rainstorm, the city was shrouded in dense fog. The Lantern Festival had arrived, yet the manufacturing towns remained eerily quiet. Many canteens and fast food shops near factories were closed, and the streets were nearly empty. After spending days visiting different townships in Dongguan, it became clear that while recruiters were eager, job seekers showed little interest — a stark reflection of the current labor market situation. At Luming Road in Qingxi Town, workers gathered at the Hardware Factory. Each factory had its own recruitment posters, but few people even stopped to inquire. Once a major hub for China's migrant labor force, Dongguan has seen a steady decline in available workers. Official data from 2007 recorded 12 million migrant workers, which marked the peak of this trend, with no further official figures released afterward. Many industry executives and labor experts agree that the Lewis turning point — where China shifted from labor surplus to shortage — has already taken shape. However, OEM companies have few alternatives. “There’s absolutely no way around it but to find new outlets,” said He Jianchen, owner of a clothing factory in Dalang Town, who expressed deep pessimism about the future. Wages have become the central issue in the labor shortage crisis. At the Zhitong Talent Market, a young man from Hunan said, “No one wants to work for less than 2,000 yuan a month.” He Jianchen added, “Wages keep rising, workers aren’t satisfied, and companies are struggling under the weight.” More than 10,000 small and medium-sized enterprises in Dongguan are caught in this dilemma, leading to a sharp slowdown in economic growth. At Luming Road in Qingxi Town, the minimum wage at Lifeng Hardware Factory was recently increased from 770 to 920 yuan, and later raised again to 1,100 yuan — reflecting a consistent upward trend in wages over the years. Since 2005, Dongguan has raised the minimum wage five times, with the increase rate accelerating each time. While many companies promise higher wages — like “a guaranteed salary of 1,150 yuan/month” or “up to 1,500–1,800 yuan/month” — most workers remain skeptical. They know that overtime hours and deductions often reduce actual take-home pay. At the Zhitong Talent Market, Liu Quanzhi pointed to a recruitment ad for an electronics factory offering an average monthly income of 2,000 yuan. “To get that, you have to work extra hours, and there are no housing or meal subsidies,” he said. Despite this, such offers are considered mid-range among local factories. In recent years, despite frequent minimum wage increases, workers’ real incomes have barely improved. Some factories have increased overtime hours, while others have cut back on food and accommodation benefits. Cai Xiaomei, a senior manager at the Zhitong Talent Market, noted that “wages are determined by the market, and the minimum wage is just a baseline. The real gains should go to management, R&D, and technology, not ordinary workers.” The wage gap between 2007 and 2009 was interrupted when the minimum wage in Dongguan rose to 720 yuan/month in 2007, but no further increases followed in 2009 due to the economic downturn. Private business owners also resisted wage hikes during that period. Dongguan’s foundry-based companies continue to face pressure from rising labor costs, and many factory owners are now expressing pessimism about the future. He Jianchen, for example, expects a 10% annual wage increase, saying, “If we raise wages, we can ensure our workers don’t stop working.” But with raw material costs also rising, he feels trapped in the industry. Faced with shrinking profits and increasing labor costs, He Jianchen is seeking alternative paths. His garment factory, once employing over 200 workers, is no longer his only business. Although conditions vary, most small and medium-sized factories producing electronics, garments, shoes, and hardware — the backbone of Dongguan’s economy — are experiencing similar challenges. On February 16, the Zhitong Talent Market, the largest in the city, saw low turnout, with many companies leaving their booths early. Workers often compare wages, looking for at least 200–300 yuan more per month. For some, this could mean saving enough to return home by year-end. However, for many factories, these wage increases are becoming a heavy burden. Sun Yu, a partner at a national consultancy firm, noted that “foundry profits are already thin, and rising labor costs will only worsen the situation.” Liu Gong, a worker, hopes to find a “good factory” with a stable wage and reasonable hours. But most of Dongguan doesn’t meet this standard. In Qingxi Town, a solar water heater factory has struggled to recruit, with only four or five people coming in eight days. Most hires come through word-of-mouth. With 60% of original workers not returning after the Lunar New Year, factory managers are growing anxious. Some have started actively recruiting in crowded areas, trying to attract any potential candidates. Xue Litong, who has lived in Dongguan for over a decade, says fewer people are coming to the city. Many older workers prefer to return home and start small businesses, while places like Jiangsu and Zhejiang offer better wages and more structured management. According to the latest statistics from the Dongguan Spring Transportation Office, 3.509 million passengers left during the Spring Festival, but only 1.6 million returned 11 days later. This mass exodus highlights the growing labor shortage and its impact on economic development. At the Zhitong Talent Market, the usual buzz of job seekers was absent. Recruitment tables were empty, and companies began to approach potential candidates directly. “There aren’t many people here, so it’s not worth waiting,” said one recruiter. This was the third job fair after the holiday, and the labor market had gone quiet. Some companies even resorted to direct outreach, saying, “Come sit down and chat.” Cai Xiaomei believes the employment turning point occurred during the 2008–2009 financial crisis. “The number of migrant workers dropped significantly,” she said. Although the crisis accelerated the trend, the labor shortage had already been evident before 2005. Dongguan’s labor shortage coincided with a slowdown in GDP growth. As the shortage worsened, economic growth slowed even more. After the reform and opening-up, Dongguan maintained a GDP growth rate of nearly 20%. Since 2005, the growth rate has declined, reaching its lowest point in over 20 years in 2007. In 2009, the government set a target of protecting ten percent growth, but GDP only increased by 5.3%. Last year, it grew by 10.3%, with a planned target of 8.5% this year. The economic development of Dongguan and the migration of workers are closely linked. With a drastic drop in the number of workers, public facilities and service industries built in previous years may now be underutilized. Green belts and wide highways stand largely unused, and city squares are quiet. As workers leave, factories are struggling. Many bosses report severe operating pressures, and the momentum of their businesses is fading. Some are exploring real estate investments or relocating their factories out of Dongguan. Recent data shows that the number of Hong Kong and Taiwan-owned companies — which once made up half of Dongguan’s economy — has dropped by 5,000 in the past two years. Many long-standing factories are now empty, signaling a deeper structural shift in the city’s economic landscape.

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