siegestate: I don't know if I read, or heard or just presumed that after factories are closing that people are going back to their native towns. I believe that I had heard it on a BBC report yesterday, but I should remember to take all news with a grain of salt. It is not atypical for migrants to flood cities in time of woe.

For decades, the steamy Pearl River Delta area of southern Guangdong Province served as a primary engine for China's astounding economic growth. But an export slowdown that began earlier this year and that has been magnified by the global financial crisis of recent months is contributing to the shutdown of tens of thousands of small and mid-size factories here and in other coastal regions, forcing laborers to scramble for other jobs or return home to the countryside.

Factories Shut, China Workers Are Suffering - NYTimes.com

siegestate: But I had also remembered from several years ago that the government was also trying to put a lot of money into farming communities, in terms of communication and roads for example...an effort to uplift them from primitive conditions as well as keep some percentage of people on farms.

Once in the interior, the workers will have less incentive than in the past to return to the coastal provinces. Rising grain prices have made farming more profitable. The Chinese government announced a rural land reform policy last month that could spur some farmers to stay on their land and make better use of it.

A growing number of factories have opened in the interior provinces as well. Wages are still lower than on the coast, but have risen quickly in recent years.

Factories Shut, China Workers Are Suffering - NYTimes.com

And on a tragicomic note, looks like my friend was right about factory owners and managers skipping town, but not necessarily on who they were and where they were doing runners to:

Wang Denggui, father of three, arrived more than a year ago in the palm-lined streets of this southern town with a single goal: toil in a factory to save for his children's school tuition.

But the plans of Mr. Wang and thousands of co-workers unraveled at noon on Nov. 1, when the Taiwanese chairman of their ailing shoe factory climbed over a factory wall to flee the country and his debts. That left several American shoe companies with unfilled orders and 2,000 workers without jobs. <...>

As was the case with the Weixu shoe factory, Smart Union closed without any notice, and hundreds of angry workers poured into the streets to demand that the local government pay them back wages. Many such factories were run by Taiwanese or Hong Kong managers who fled the mainland. Chinese police and courts have limited reach in Hong Kong, which has a separate legal system, and they have almost no ability to prosecute people in Taiwan, which is treated as a renegade province and does not have formal political or diplomatic relations with the mainland.

Factories Shut, China Workers Are Suffering - NYTimes.com

On a brighter, and perhaps related note:

The wave of factory shutdowns is taking place at a time when migrant workers are more aware than ever of their legal rights and know how to put pressure on local governments. Two national labor laws were enacted in January that, among other things, require companies to pay severance and give out more long-term labor contracts. The laws could lead to more labor disputes and protests, said Mary Gallagher, director of the Center for Chinese Studies at the University of Michigan.

"Increasingly, the migrant workers know their rights," she said. ...

Factories Shut, China Workers Are Suffering - NYTimes.com