SHANGHAI - JOB cuts, factory closures, unpaid export shipments - stalling worldwide demand for products made-in-China is driving home a new economic reality for businesses that until recently were struggling to keep up with soaring exports.

China's economy is still growing at an enviable rate: It expanded 9 per cent in the quarter ending Sept 30. But that was the slowest in 5 years and down from 11.9 per cent last year. Forecasts for next year range as low as 7.5 per cent.

The suddenness and severity of the chill from the global slowdown prompted leaders to announce late on Sunday a US$586 billion (S$877 billion) economic stimulus package.

'This broad-based fiscal stimulus program will emerge as the government's front line of defence against an excessive economic slowdown,' Ms Jing Ulrich, JPMorgan's chairman for China, said in a note to clients.

But it's unclear whether the package will be enough.

For apparel maker Yiwu Bangjie, the first sign of trouble came with the failure of a longtime American customer to pick up and pay for its latest shipment of seamless underwear, says Mr Tao Jianwei, the company's general manager.

'After the shipment arrived at the US port... their reply was that they had no money to pay for the goods,' said Mr Tao, whose company is based in the Zhejiang province.

Yiwu Bangjie is one of the luckier casualties of the slowdown.

Mr Tao, who would not identify his US customer, said he expects to get 90 per cent of the US$100,000 due back through export credit insurance.

Others have suffered far more.

Thousands of factories have closed, especially those in labour-intensive industries such as toys and shoes.

The economic planning agency reports that 67,000 small- and medium-sized companies closed down in the first half of the year. In the months since, conditions have deteriorated, with nearly daily reports of factory closings and layoffs.

Among the most recent, BEP International Holdings, a home appliance maker that employed about 1,700 people, according to its website, suddenly stopped operations Oct 20 in Shenzhen.

'It is difficult for the company to obtain bank financing and other sources of financing,' the company said in an announcement to the Hong Kong Stock Exchange.

As growing numbers of companies close or slash production due to sinking sales, shippers of raw materials have also been affected.

The Baltic Dry Index, which measures drybulk shipping rates on 40 routes across the world and is a key indicator of demand, has declined more than 11-fold, to 891 in early November from 11,793 points in May.

Mr Ken Wong, manager of a Shanghai-based shipping agency has seen profit shrink by 30 per cent this year.

China's Ministry of Commerce estimates that cash-strapped US businesses alone owe Chinese exporters US$100 billion on unpaid orders. The problem, has spread to consumer products, clothing, shoes and appliances.

As the world's appetite for China's products wanes, the effects are reverberating through the economy - and beyond its borders.

Increasingly, Chinese orders for iron ore, scrap metal and other commodities are being abandoned as buyers find themselves unable to get letters of credit or other financing to pay for the shipments, which end up sitting on the docks of Chinese ports.

Meanwhile, the losses are trickling down to white collar workers who are cutting back on spending as they fret over job security, and to migrant workers, who have begun heading back to rural areas as factories and construction projects shut down.

To boost growth, Beijing has slashed interest rates three times in two months in addition to the hundreds of billions of dollars it has promised in tax breaks, credit guarantees, new construction projects and other measures.

'The good times seem to be over,' said Mr Pan Henfei, who gathers paper and bottles for recycling in Shanghai, China's bustling financial capital.

As offices cut back on newspaper subscriptions and supplies, there's less for him to scavenge. And, he complains, the price he gets for paper has dropped 40 per cent to 1 yuan (S$0.22) a kilogram.

'I'm just a poor migrant trying to make it in the big city so that my child might be able to get out of the village,' said Mr Pan.

'Now some of my friends from the countryside are thinking of giving up this work and going back home. At least we can still do some farming.' -- AP