Lingering at a day market for labourers in Panyu, an urban village on the outskirts of Guangzhou, Ms Qiu looks dejected. She is looking for a local factory that will hire her for the day to sew clothes – cheap tops and dresses that will be churned out on to China’s e-commerce platforms, or bundled up for export to western shoppers. But she is not having much luck.

“The whole industry is struggling, and now there is a high tariff on Chinese goods because of the trade war. Many foreign clients have decreased their orders from China,” she says, declining to give her first name.

Guangzhou, China’s southern metropolis and the capital of Guangdong province, is home to nearly 20 million people. It is also the humming, whirring and buzzing heart of the global fast fashion industry. In its urban villages, ramshackle settlements that have been absorbed into the city’s sprawl, millions of workers toil day and night in informal workshops to produce cheap garments. In one small, crowded factory, women sit behind sewing machines next to teetering mountains of starched black tutus. In another, pink denim jeans destined to be sold on fast fashion website Shein are piled high on every available worktop.

Every morning, workers gather in informal labour markets like the one in Panyu to see if they can find work for the day sewing on hundreds of buttons, or ironing hundreds of collars. Depending on the complexity of the task, workers earn between one and 10 yuan per item, toiling for long hours in cramped conditions.

“This is hard-earned money,” says a worker in his 60s in Datang, another urban village about ten miles north of Panyu. Ironing jackets at 8am, before packaging them up to be exported, the man, who declined to give his name, was part-way through a shift that had started at 11pm the night before. He earned two yuan per jacket, he said. More than a dozen garment workers interviewed by the Guardian all said that a normal working day was 10 to 12 hours, with some saying they only took one rest day each month.

‘Little room for profit’

While China’s domestic e-commerce market has boomed in recent years, it is overseas orders that keep the factory lights on. Around one-quarter of the more than $100bn of textiles and apparel imported to the US came from China last year. Guangdong alone exported more than $7bn, according to data from the Global Trade & Industry Growth Lab by Sinoimex, a commercial data firm.

But in April, Donald Trump, the US president, launched a trade war with China, which sent shockwaves through the global economy. Tariffs on Chinese goods reached 145%, with China responding with similar duties and trade restrictions, before the two countries agreed to a 90-day pause in May. With a 12 August deadline looming to reach a deal, workers in Guangzhou are wondering whether or not they’ll be able to keep selling clothes to Americans.

In Panyu, Yang Ruiping has run his small clothes factory, which specialises in tops and employs about 20 people, for two decades. About 30% of his orders are exported, mostly to Shein and Amazon, down from more than 50% before the pandemic. Although the pause in the trade war has eased the pressure on his business slightly, he still has “little confidence in the US”.

“In the recent US-China trade war, if the tariffs go up, we need to lower the production costs to combat it,” he says. “It leaves little room for profit”. With no room to cut wages any lower, Yang says he is already losing money on every top he sells. He keeps accepting the orders in order to keep the factory open, but with the domestic market becoming increasingly competitive, he is aware he might not be able to operate much longer.

Shein is everywhere in Panyu. The China-founded, Singapore-headquartered company revolutionised the garment industry in Guangzhou, allowing small manufacturers like Yang to sell directly to western customers, and offering shoppers rock-bottom prices. While big high street brands operate larger, dedicated factories, Shein places small batch orders directly with independent manufacturers, ramping up production for the designs that sell well online. The flexibility of this model has fuelled the company’s meteoric rise. Shein accounts for about 50% of the US fast fashion industry, according to Bloomberg Second Measure, a data analytics firm.

The company’s growth has also been thanks to a loopholes in the US customs regime, which allowed low-value goods to be imported free. In 2022, over 30% of all the small packages imported under the so-called “de minimis” exemption came from Shein and Temu, another Chinese e-commerce company. On 2 May, Trump closed that loophole for goods from China and Hong Kong. This week, he expanded that ban to goods from all countries, meaning that suppliers can’t avoid tariffs by shipping via third countries. A recent analysis by Reuters found that prices on Shein increased by an average of 23% between 24 April and 22 July.

The US market is “volatile and risky,” says Peng Jianshen, the boss of a medium-sized denim clothes factory in Zengcheng, another of Guangzhou’s urban villages. “When tariffs were suddenly increased, the entire US-focused production stopped. No one dared to continue”.

Experts say that the uncertainty of the trade war could have a negative impact on working conditions, encouraging workers to add hours to their already punishingly long shifts.

“Generally, when we’re talking about the garment industry in China, workers don’t have rest days,” says Li Qiang, the founder of China Labor Watch, a US-based NGO. “They’re paid by piece rate. So they work as much as possible when the orders are still there.”

But factory bosses in Guangzhou say the trade war is only the latest in a series of problems facing their industry. Global conflicts and low consumer spending in China mean that it’s hard to pivot away from the US and towards other markets.

Li Jun, a chain-smoking factory boss, runs a denim clothing factory that sells jeans to Russia. He says the economic impact of the war in Ukraine, plus the fact that many of his would-be customers have been drafted to fight in the conflict, have been bad for business. “The economy is not doing well anywhere,” he says. “A lot of factories are shutting down.” At his peak he was exporting 100,000 pairs of jeans per month, with more than half going to Russia, but now it’s 30,000 to 40,000 pairs each month, meaning that he just about breaks even.

Manufacturers in places like Guangzhou have long been the engine room of China’s growth. But in recent years, keen to shed the label of being the world’s factory, Beijing has been pouring all its political and economic support into hi-tech industries, such as artificial intelligence and semiconductors. “The Chinese government no longer supports these kinds of light industries or small individual businesses,” Li says. “It’s really hard to keep things going”.

Additional research by Lillian Yang