The impact of the financial crisis has also been seen to precipitate contractions in China's auto export industry, and to complicate matters for Chinese internet-based startups dependent on foreign venture capital. Difficulties in accessing credit for trade, moreover, have exposed overcapacity in China's steel and heavy industry sectors and exacerbated raw material price decreases across the board, and have apparently even stranded container-loads of goods in harbors because they cannot be financed.  

Yet much of the actual human misery in China associated with the crisis has fallen on the export manufacturing base in the Pearl River Delta, where an already dire situation has attained the features of a crisis. At least 2.7 million factory workers in southern China stand to lose their jobs after demand slowed considerably for electronics and toys. 9,000 of the 45,000 factories in the cities of Guangzhou, Dongguan and Shenzhen are expected to close down in the coming months. This year's orders from the US for Christmas products made by Chinese manufacturers have fallen off a cliff, and the latest CLSA China Manufacturers Purchasing Index (based on monthly questionnaires sent to 400 Chinese manufacturers), released in early October, indicated the steepest fall in the volume of both domestic and foreign orders since the survey began in June 2004. 

52% of China's toy exporters, still reeling from inflated manufacturing and labor costs as well as a spate of recalls in 2007, have gone out of business in 2008, as have a number of Hong Kong-linked firms. One of the biggest of these was Smart Union Group and its Hejun Toy Factory in Dongguan, whose bankruptcy earlier this month was ascribed by local media to the firm's attempt to overcome tough export conditions by committing more resources while existing on loans. When Hong Kong banks tightened their credit facilities in the wake of the financial crisis, 7000 factory workers in China suddenly found the factory gates barred.  

Yet if the financial crisis is wreaking havoc in southern China, Guangdong Vice Governor Wan Qingliang is not too ill-disposed to what's been going on. By emptying the cage for the new birds, as he put it, Wan sees the financial crisis as an opportunity to further the process of transplanting modern manufacturing into Guandong's melting low-value empire. And if the misery in Guangdong can be passed off as unavoidable growing pains, bringing hardship to millions yet ultimately facilitating modernization, then its fate is tied up with an historic turning point where the need for transition has become critical under the influence of the ongoing financial crisis. As China approaches 30 years of economic reform, the growth that has brought China this far needs to be reconstituted to shift the balance of the Chinese economy from FDI and exports to domestic consumption, services and innovation. 

With the latest hardship brought on by the financial crisis, the suffering toy factories of Guangdong could become monuments to a China that is slowly fading from view: a China characterized by low-value industries and blemished by recalls of unsafe and poor quality products. Guangdong, once the harbinger of China's economic miracle and now caught up in the crunch of the financial crisis, could contribute to bringing the era of the dirt-cheap China price to a close by advancing China's transition to modern manufacturing. Yet in Guangdong, the current price to pay is an overbearing share of misery, for which the promise of the China of tomorrow is little solace.