On August 30, an article titled "The Salaries in Small Jiangsu, Zhejiang, and Shanghai County-level Cities Have Started to Collapse" became a hot search topic. It discussed something the author heard last month when visiting a county-level city under Nantong to have dinner with a friend.
He has a friend who has been working in mechanical design for five years, with a stable monthly salary of 8,000 yuan. However, this year the factory cut more than half of its foreign trade orders, and his salary was directly reduced to 5,000 yuan, with quarterly and year-end bonuses canceled. The number of frontline workers was also cut in half. His friend said that in the past, he could at least save money to pay for a down payment, but now after deducting social security, he barely has enough for living expenses, and is even struggling to pay his mortgage.
The article also added that this situation is not limited to that one county town, as the author recently visited several county-level cities and found that many small county towns have seen their wages collapse, with some even experiencing more drastic declines than major cities.
I only half believe that.
In a county-level city under Nantong, a mechanical designer mainly serves local equipment manufacturers and parts factories. Over the past two years, these factories have been among the hardest hit by a sharp decline in foreign trade orders. With orders dwindling, design positions, which are not on the front lines, are the easiest to cut. The workforce was reduced from 8,000 to 5,000, a cut of nearly 40%, and bonuses were also eliminated. This magnitude of reduction is not unusual in factories in the Jiangsu and Zhejiang regions.
However, using a friend's salary to represent the salary of an entire province is not feasible. One person's salary reduction may be related to the industry, the specific factory, or the particular position. The term "collapse" is also used too loosely, and if it's truly a collapse, it should be a universal, continuous, and irreversible decline.
The household income data for Jiangsu and Zhejiang provinces in the first half of 2026 is out, with wage income still growing nominally. Per capita disposable income of all residents in Zhejiang reached 39,807 yuan, up 5.3% year-on-year. The numbers are rising, just at a slower pace than in previous years.
The gap between perception and statistics is what needs to be explained.
So this article is taking a different approach, not counting how many friends have taken a pay cut, as there are too many such cases and it's hard to give an accurate count.
I want to break down the industrial structure of southern Jiangsu and Zhejiang counties step by step: where products are sold, where they stand in the industrial chain, how much tariffs and freight costs have increased over the past two years, and what the profit statements of enterprises look like after being squeezed. Once these are clear, it's not hard to guess what will happen to wages.
The bottom line: wages in Jiangsu and Zhejiang's county economies haven't collapsed, but they're stuck — wedged in an awkward position. Exports are still growing, but profits have already fallen off a cliff. And profits are what feed wages.
$10,200, the profit from a whole cabinet just vanished
On August 20, 2026, a freight forwarder provided a quote: for shipments from Shanghai Port to Jeddah Port in Saudi Arabia, with a transit in Port Klang, Malaysia, the price for a 20-foot container is $6,500, and for a 40-foot container, it is $10,200.
This price is not yet locked in, according to a freight forwarder who accepted an interview, and there is still a possibility of receiving new price increase notices before the ship sets sail on September 1.
Half a month ago, the freight rate for 40-foot containers on some Middle Eastern routes was still around $7,000. By late August, the transshipment rates for destinations such as Kuwait Port, Umm Qasr Port, Umm Qasar Port, and Saudi Dammam had also successively broken through $10,000.
To get a clear view of the magnitude of this round of price increases, the entire table needs to be laid out.
On August 21, the Shanghai Export Containerized Freight Index stood at 3409.63 points, up 1.62% week-on-week and 140.9% year-on-year. By route, the freight rate from Shanghai port to the Persian Gulf basic port was $5,729 per TEU, up 5.66% week-on-week and 287.36% year-on-year, the highest since data became available in 2009;
To the US West Coast, the price reached $6,765, up 311.5% year-over-year;
to $9,700 to the US East Coast, up 271.22% year-over-year;
To South America, $7,805, up 151.21% year-on-year;
to Australia and New Zealand at $2,315, up 82.72% year-on-year;
To Europe at $2,842, up 70.38% year-over-year;
To the Mediterranean at $3,767, up 69.3% year-over-year.
On the same day, freight rates from Shanghai to Japan's Kansai and Kanto regions were $319 and $323, respectively, unchanged from the previous period.
The same ship leaving Shanghai charges over $300 to go to Osaka, but over $5,700 to go to the Persian Gulf. This price difference itself is a true reflection of this year's foreign trade.
The issue is that with a price tag of $10,000 per container, it's not just the furniture industry that can't afford it.
I have researched the monthly operating data released by the Zhejiang Furniture Industry Association over the years, and typically, production, revenue, and export delivery value are listed separately. From January to June 2026, the cumulative production of furniture enterprises above the designated size in the province was 154 million units, up 7.0% year-over-year, which seems to be a decent performance.
It's different when you look down.
In the same period, the operating income of furniture enterprises above the designated size in the province was 59.424 billion yuan, up 2.2% year-on-year, with a total profit of 7.93 billion yuan, down 66.2% year-on-year.
Output increased by 7%, revenue rose by 2.2%, and profit plummeted by two-thirds.
It's the same even on a national scale.
On July 27, data released by the National Bureau of Statistics showed that in the first half of 2026, the national furniture manufacturing industry's operating revenue was 257.61 billion yuan, down 8.6% year-on-year, with total profits of 4.57 billion yuan, down 52.7% year-on-year.
The same report showed that the total profit of the non-metallic mineral products industry decreased by 47.8% year-on-year, while the wood processing and wood, bamboo, rattan, palm, and grass products industry decreased by 33.7%.
Meanwhile, another key figure for the same period shows that profits of China's large-scale industrial enterprises grew 18.7% year-over-year in the first half of the year. From January to July, the country's exports increased 14.0% year-over-year, and the value-added of large-scale industries rose 5.3%.
Place those two sets of figures on a single sheet of paper, and the gap between them marks exactly where a large swath of county-level factories across southern Jiangsu and Zhejiang now stand.
Figure 1: Performance of Shanghai Export Container Freight Index by Route on August 21, 2026
Second, exports increased by 14%, so why do factories in counties still have no orders
Starting with the broader picture. According to Hangzhou Customs, Zhejiang's total imports and exports reached 2.97 trillion yuan in the first half of 2026, up 8.6% year-on-year. Exports totaled 2.26 trillion yuan, a 9.2% increase. The province accounted for 11.7% of national imports and exports, 15.4% of exports, and 6.5% of imports. Jiangsu posted even stronger momentum, with first-half export growth of 24.8%, leaving its export value just $110 million behind Zhejiang's.
These numbers don't look like they've "collapsed" at all.
But to see which part is rising, we need to break it down.
Zhejiang's high-tech product exports totaled 209.66 billion yuan in the first half, up 22.5% from a year earlier and lifting their share of provincial exports by one percentage point to 9.3%. Exports of the "new three" — electric vehicles, lithium batteries and solar products — rose 57.7% to 94.97 billion yuan, contributing 18.2% of the province's overall export growth. Electric vehicle and lithium battery shipments both more than doubled, while ship and marine engineering equipment exports climbed 27.9% and new materials jumped 86.3%.
Intelligent bionic robots exported 430 million yuan, accounting for 60.2% of the country's exports of similar products.
The problem is precisely this: 9.3%.
This ratio means that for every 100 yuan of goods exported by Zhejiang, only 9.3 yuan consists of high-tech products, with the remaining 90-plus yuan still coming from the traditional trio of labor-intensive exports.
Exports are rising, driven by growth in ships, batteries, and robots. However, county-level factories producing hardware, textiles, and soft sofas have little to do with this wave of growth.
The situation with the old trio can be illustrated most intuitively with home textiles as an example.
In the first half of 2026, China's textile industry exported $5.43 billion worth of goods to the US, its largest market, representing a year-on-year increase of 13.2% and accounting for 32.7% of the total. While this sounds decent, the US imported $5.9 billion worth of home textile products during the same period, a year-on-year decline of 12.7%. The market itself is shrinking, yet we continue to increase exports, at the cost of lower prices and profit margins.
Zhejiang's home textile exports reached $5.89 billion, accounting for 35.5% of the national total, and grew by 6.2%.
Jiangsu was $3.44 billion, up 3.3%.
In Vietnam, the export of wood and wood products reached $8.6 billion in the first half of the year, up 4.9%. This substitution is not a new phenomenon, but it has become more pronounced this year as order losses have become more noticeable.
Another set of numbers is even more telling.
In the first half of 2026, China's top three provinces and cities for exports to the US were Guangdong with $67.77 billion, Zhejiang with $42.69 billion, and Jiangsu with $26.56 billion, representing year-on-year increases of 2.0%, 4.6%, and a decline of 17.6%, respectively.
In the same Yangtze River Delta region, Jiangsu's exports to the US dropped by nearly 20%, while Zhejiang's continued to rise.
The difference does not lie in tariffs, but in the fact that the two provinces sell different types of products to the United States.
The numbers for private enterprises also need to be looked at separately.
During the same period, private enterprises in Zhejiang achieved imports and exports of 2.46 trillion yuan, up 9.8%, accounting for 82.8% of the province's total imports and exports, and contributing 92.7% of the foreign trade growth, with 120,000 private enterprises having import and export records, an increase of 17,000 from the same period last year.
Among the 120,000 households, the majority are small factories with annual revenues of several tens of millions.
They contributed 90% of the increment and bore almost all of the cost increases.
Figure 2: The "rising half" of Zhejiang's exports vs. the "collapsing half" of traditional manufacturing (January–June 2026)
Output increased by 7%, while profit plummeted 66%
A look at the profit statement released by the Zhejiang Province Furniture Industry Association on July 30 is more convincing than any commentary. From January to June 2026, the 1,197 large-scale furniture enterprises in the province achieved a total business revenue of 59.424 billion yuan, representing a year-on-year increase of 2.2%.
Operating costs were 48.608 billion yuan, up 3.7% year-on-year;
Profit and tax totaled 2.715 billion yuan, down 35.8% year-over-year.
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Total profit was 793 million yuan, down 66.2%.
Tax revenue was 1.922 billion yuan, up 2.1%.
Note the tax column.
Profit dropped by two-thirds, while taxes still rose 2.1%.
The expense line warrants closer scrutiny.
Selling expenses were 2.899 billion yuan, down 2.1% year-over-year;
Management expenses were 3.96 billion yuan, up 0.9%.
Research and development expenses were 2.023 billion yuan, up 0.3%.
Financial expenses were RMB1.024 billion, up 282.8%.
282.8%. The financial expenses of a furniture factory have nearly tripled, which can be attributed to a few possible factors: loan interest, exchange losses, and increased capital turnover costs due to extended payment terms.
In the first half of the year, the producer price index for industrial products in Zhejiang rose 0.6%, while the purchase price index for industrial producers increased 2.5%, with the 1.9 percentage point difference stuck in the gap between the slow rise in ex-factory prices and the inability to suppress raw material prices.
Looking at the product structure, the province's wooden furniture output was 29.3564 million units in the same period, a cumulative decline of 7.8%.
Soft furniture totaled 10.2771 million pieces, a decline of 6.23%.
Metal furniture 72.7944 million pieces, up 5.4%.
Total output reached 154 million units, up 7.0%.
It's the metal furniture with low unit prices and thin profit margins that's seeing an increase, while wooden and soft furnishings, which were previously the most profitable with high unit prices, are experiencing a decline. Production volumes are up, but value is down.
The other end of the terminal was also unaccommodating. The national building materials and home furnishings prosperity index was 113.34 in June, down 16.34 points month-over-month and 2.80 points year-over-year. From January to June, the cumulative sales of national building materials and home furnishings stores above a certain scale totaled 664.037 billion yuan, down 4.39% year-over-year.
China's cumulative furniture exports totaled 243.7 billion yuan, with an overall decline of 0.8%.
The export delivery value of furniture enterprises above the designated size in Zhejiang was 22.641 billion yuan, down 0.3% year-on-year.
The average number of employees was 176,000, down 0.7% year-on-year.
The decline is not significant, and this number needs to be interpreted in reverse: it indicates that most factories are still holding on, with no large-scale layoffs, but rather a halt in hiring and replenishing staff. Those that are truly struggling are the ones that will shut down and subsequently disappear from statistical radar.
Another look at the broader market: in the first half of the year, profits of industrial enterprises above designated size rose 18.7% year on year, while the furniture manufacturing sector fell 52.7%.
These two sets of opposing numbers come from the same statistical report and are listed right next to each other.
Figure 3: Revenue penetration of 1,197 above-scale furniture enterprises in Zhejiang (January-June 2026, in billion yuan)
The tertiary sector accounts for 60% of the economy, so why are wages still stagnant?
There's a popular notion that the secondary industry is affected by tariffs and domestic demand, but since the services industry price index is rising, wages should increase accordingly.
First, let's outline the structure of the three locations.
In the first half of 2026, Jiangsu's gross regional product reached 7.03873 trillion yuan, with value added from the primary sector at 193.07 billion yuan, the secondary sector at 2.95206 trillion yuan, and the tertiary sector at 3.89359 trillion yuan, accounting for 2.7%, 41.9%, and 55.3% of the total, respectively.
Zhejiang's gross regional product was 47,937 billion yuan, with the primary sector at 1,129 billion yuan, the secondary sector at 18,130 billion yuan, and the tertiary sector at 28,678 billion yuan, accounting for 2.4%, 37.8%, and 59.8% respectively.
The Shanghai region's GDP was 27,886.63 billion yuan, with the primary sector at 35.76 billion yuan, the secondary sector at 5,696.66 billion yuan, and the tertiary sector at 22,154.21 billion yuan, accounting for 0.1%, 20.4%, and 79.5% respectively.
The tertiary sector accounting for 60% or 80% is not inherently problematic in terms of structure.
The problem is that the growing part of the tertiary sector has little to do with ordinary workers in the county.
In the first half of the year, Shanghai's tertiary industry increased by 5.9% in terms of added value. The financial industry's added value was 4964.18 billion yuan, up 10.2%; the information transmission, software, and information technology services industry's added value was 3850.95 billion yuan, up 9.1%.
The rental and business services industry was 2302.70 billion yuan, up 5.8%.
In Zhejiang, the situation is similar, with the software and information technology services industry growing 10.0%, the leasing and business services industry growing 10.1%, and the financial industry growing 5.8%.
Finance, software information services, and business services.
The majority of jobs in these three fields are located in Hangzhou Future Science and Technology City, Shanghai Lujiazui, and Nanjing Hexi, rather than in industrial parks on the outskirts of county-level cities.
The service industries in the county include catering, retail, logistics, and auto repair. The prosperity of these industries moves in tandem with whether the neighboring factory has orders, not in opposition to it.
Consumption data confirms this.
Shanghai's total retail sales of consumer goods reached 831.973 billion yuan in the first half of the year, up 0.7% year-on-year. For January through July, the cumulative figure was 952.951 billion yuan, down 0.2% year-on-year, slipping into negative territory. Nationwide, retail sales of consumer goods totaled 28.7744 trillion yuan in the January-July period, up 1.2%. Zhejiang's first-half retail sales came in at 1.9539 trillion yuan, up 3.0%, a relatively solid performance among eastern provinces.
Looking at income, from January to June, the per capita disposable income of all residents in Zhejiang was 39,807 yuan, up 5.3% year-on-year, 16,826 yuan higher than the national average, ranking first among all provinces. By source, per capita wage income was 22,119 yuan, growing 5.9%;
Operating net income was 7,074 yuan, up 6.6%.
Net property income was 4,792 yuan, up 1.2%.
Net profit attributable to shareholders was 5,821 yuan, up 4.8% year-over-year.
Wage income rose 5.9% — a figure that is far from modest.
Urban residents' per capita disposable income was 45,324 yuan, with actual growth of 3.5% after deducting price factors, while net property income only rose 1.2%. With no increase in property values, rents, or financial investment returns, the drag on family finances from this aspect has a greater impact on spending power than the numbers on a paycheck.
There is still one more bill that is easily overlooked.
From January to July, fixed-asset investment nationwide fell 6.7% year on year, with tertiary industry investment down 9.5% and real estate development investment down 19.2%. The contraction in government-led investment means service industries that rely on public orders and project-related support will face tough times ahead.
Figure 4: Comparison of three-tier industrial structure and consumption-side growth rates in Jiangsu, Zhejiang, and Shanghai (January–June 2026)
5. The number of clusters increased by 45% to 160, with Zhejiang and Jiangsu being worlds apart
The economies of Jiangsu and Zhejiang provinces are often mentioned together, but when it comes to industrial clusters, the two are taking different paths.
Zhejiang started with a block economy, and according to data released by the Zhejiang Provincial Department of Economy and Information Technology, 41 cluster core areas and 67 collaborative areas were selected in batches, with counties and functional zones as the basic units, covering 57 counties and cities and 9 functional zones, and cumulatively cultivating 8 national advanced manufacturing industry clusters and 23 national small and medium-sized enterprise characteristic industry clusters.
In 2024, these core zones and coordinated development zones contributed 80% of the province's manufacturing investment growth and 90% of its industrial output growth.
A large quantity does not necessarily mean a high level of technological content.
I've come across a compilation of industrial clusters in Zhejiang's counties, with a total of around 160, of which less than 15% can be considered high-tech.
No authoritative public figure was available for this number, so it should be treated as approximate only.
In the first half of 2026, the value-added of equipment manufacturing in Zhejiang's large-scale industries accounted for 53.6%, while high-tech manufacturing accounted for 18.7%. In 2024, 17 key traditional manufacturing industries contributed more than 60% to the growth of large-scale industries.
Traditional industries account for 60% of growth—and for the entirety of this round of profit collapse. That is what makes Zhejiang's position so difficult: these sectors are too vital to abandon, yet too costly to sustain.
Jiangsu's situation is somewhat different. It has fewer clusters, but a notably higher share of technology-focused ones. Even clusters centered on mid- to low-end manufacturing include a number of equipment and key technology suppliers positioned upstream in the supply chain.
Taking Suzhou's two county-level units as a comparison is the most intuitive.
Kunshan’s industrial output above designated size reached 635.53 billion yuan in the first half, with electronic information industry output at 385.261 billion yuan, comfortably exceeding 60% of the total. Utilized foreign investment totaled $660 million, up 14.2% year-on-year, with 61 foreign-funded enterprises opting to increase capital. High-tech enterprises’ output rose to 51.8% of above-designated-size industrial output. The city’s approach is to turn intelligent computing into infrastructure, with capacity nearing 30,000 PFLOPS, and 37 leading Taiwan-based enterprises have already moved into new AI tracks.
Wujiang is taking a different path.
Without a strong foundation of foreign capital, the backbone is composed of domestic private enterprises, with over 6,200 textile companies covering the entire industry chain. Hengli Group achieved revenue of 899 billion yuan in 2025, expanding from refining and petrochemicals to textiles and heavy industry, and also led the establishment of the National Advanced Functional Fiber Innovation Center.
Two paths share a commonality: they both involve taking traditional industries deeper into technology, rather than switching to a new track.
Looking back at Hangzhou.
DeepSeek, Unitree Robotics, Deep Robotics, Game Science, Qunhe Technology and BrainCo — six companies with an average age of under 10 years — span sectors including large language models, robotics, AAA games and brain-computer interfaces. In 2025, they went from breaking into the mainstream to seeing three of them launch IPO processes.
Many people view "Hangzhou's Six Little Dragons" as a successful case of city marketing.
I actually think this reflects a major manufacturing province having a clear understanding of its own industrial structure.
Zhejiang has 130,000 tech-oriented small and medium-sized enterprises, 60,700 enterprises above the designated size in industry, 47,500 national high-tech enterprises, and 1,801 specialized, refined, and innovative small giant companies, with the base number being what it is, but the proportion of high-tech manufacturing in enterprises above the designated size is still only 18.7%.
Not in a hurry to bet on new names — what else can we do.
Figure 5: Comparison of Six Aspects of County-level Economies in Zhejiang and Sunan (Qualitative Assessment)
Sixth, the profit situation of the four types of enterprises, and my judgment on this matter
When these numbers are strung together, they roughly reveal the order of the plight of enterprises in different sectors of Jiangsu and Zhejiang counties: traditional foreign trade processing was the hardest hit, followed by e-commerce and domestic sales-driven businesses, then local services, while the emerging manufacturing sector is actually expanding.
This ranking isn't from the statistics bureau—it's a qualitative judgment I pieced together from available industry data and county-level field research, so it should only be read for directional trends.
The question is: Have salaries in small counties in the Jiangsu, Zhejiang, and Shanghai areas collapsed?
My response did not crash, but it did freeze.
The per capita disposable income of residents in the province was 39,807 yuan, up 5.3%, still ranking first among all provinces and regions in the country;
Wage income was 22,119 yuan, up 5.9%.
The average urban surveyed unemployment rate was 4.7%, below the national average.
These numbers do not support the notion of a "collapse".
What has truly changed is the source of growth.
In the same period, the growth rate of the added value of industries above the designated size in Zhejiang was 8.0%, with high-tech manufacturing growing 16.2%, digital economy core industries manufacturing growing 15.5%, and equipment manufacturing growing 13.1%. The pillar industries of automobiles and computer communications electronics grew 21.6% and 19.7%, respectively.
During the same period, the total profit of the furniture manufacturing industry decreased by 52.7%, the non-metallic mineral products industry decreased by 47.8%, and the wood processing industry decreased by 33.7%.
Growth hasn't stopped, it has just shifted elsewhere.
The most struggling group during this transition period are the majority of people who are still standing on the old track but lack the ability to switch to a new one. Their salaries have not decreased, but they are no longer increasing; the factories have not closed, but they are no longer hiring.
This state is harder to perceive than a collapse.
The statistical reports show a picture of "stable progress", while the industry landscape is undergoing a silent shift.
There's another point worth clarifying. In this round of consolidation, the counties that have withstood the pressure share a common characteristic: either they established their industries in the upstream of the supply chain early on, or they placed heavy-asset infrastructure at the forefront, allowing enterprises to develop new businesses on their own.
In the first half of the year, Kunshan utilized $660 million in actual foreign investment, up 14.2% year on year, with 61 foreign-funded enterprises expanding their capital. That wasn't driven by investment-promotion rhetoric, but by tangible assets like nearly 30,000 PFLOPS of intelligent computing capacity.
Conversely, sectors that are purely contract manufacturing, competing only on price and riding traffic dividends, feel exactly the same whether they're in Zhejiang or southern Jiangsu.
At this point, I must admit that transformation offers no quick fixes.
Vietnam's wood and wooden product exports reached $8.6 billion in the first half of the year, up 4.9%. From January to May, US imports of home textiles decreased by 12.7% year-over-year, and these market shares will not be easily regained overnight.
On August 20, the quote was $10,200 for a 40-foot container.
It is said that there may be another price increase notice before the ship sets sail on September 1.
Figure 6: Qualitative ranking of profit positions across four enterprise types in Jiangsu-Zhejiang counties
Risk Alert
Data Source Appendix
Container freight rates: Shanghai Shipping Exchange's SCFI, as of August 21, 2026; quotes from Shanghai Port to Jeddah Port as reported by Daily Economic News on August 24, 2026.
Industry profits: according to the National Bureau of Statistics' "Profits of National Scale Industrial Enterprises from January to June 2026" and data released by the Zhejiang Province Furniture Industry Association on July 30, 2026.
Foreign trade data: Hangzhou Customs, the General Administration of Customs of China, and the Digital Economy Laboratory of the University of International Business and Economics' "China-US Goods Trade Monthly Monitoring Report (January-June 2026)", and the China National Household Textile Association.
Regional Economy: The statistical bureaus of Jiangsu, Zhejiang, and Shanghai released unified GDP accounting results and economic performance reports for the first half of 2026.
Resident Income and Expenditure: National Bureau of Statistics and the National Bureau of Statistics Zhejiang Investigation Team's 2026 First-Half Resident Income and Expenditure Situation.
6. Industrial clusters: public materials from the Zhejiang Provincial Department of Economy and Information Technology on the "415X" advanced manufacturing cluster cultivation program; H1 2026 economic data from the Kunshan Municipal People's Government; the 2026 Government Work Report of the Suzhou Municipal People's Government.