In 2025, Brazilian authorities sued a local subsidiary of Chinese electric vehicle maker BYD for labor violations at a factory construction site, describing conditions as "analogous to slavery." According to the lawsuit, the company confiscated workers' passports - most of them Chinese nationals - withheld promised pay, and locked employees inside dormitories at night.
The case might appear to be an isolated incident, but MIT economist Yasheng Huang has argued in a Foreign Affairs analysis that it reflects a systemic pattern, "Hvylya" reports. China's treatment of its workers, Huang wrote, "is not a side product of its manufacturing prowess" but "a root cause of why China dominates the rest of the world in making things."
The mechanism is straightforward: by underpaying laborers, the state, firms, and investors amass capital surpluses that fund further industrial expansion. In a UNIDO ranking of 87 countries by the share of manufacturing output paid as wages, China placed second to last, ahead of only Indonesia.
The BYD case alarmed even the governments of developing countries, Huang noted. But the broader problem extends well beyond one company. Low wages enable China to compete across the entire manufacturing spectrum - from high-tech sectors like solar panels and electric vehicles to labor-intensive goods like textiles, shoes, and toys. Cheap Chinese imports have shuttered factories and destroyed manufacturing jobs in countries around the world.
Chinese wage compression, Huang concluded, has hurt not only workers inside China but their counterparts elsewhere - making it a global labor issue, not merely a domestic one.
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