The phones have stopped ringing on the sales desk

China’s export-led boom has collapsed and thousands of factories have closed – but can infrastructure spending bolster the growth rate needed to keep social unrest at bay?

Whirling toy helicopters, anyone? Ben Bernanke, the world’s most powerful central banker, may have whetted appetites for large numbers of them. But China’s manufacturers just cannot shift them any more.

In recent weeks, Western businessmen, such as Britain’s Josef Jelinek, have found themselves bombarded with promotional emails for Chinese toys. Jelinek had no previous connection with the toy industry. But such blind, indiscriminate marketing is a sign of growing desperation among Chinese exporters. On what should be the busiest period for the country’s export factories, the order department phones haven’t rung and the websites haven’t been clicked.

The drying up of orders has brought a dramatic 26 per cent fall in China’s exports in the year to February. In the past seven months, exports have plummeted by $725 billion, with almost 90 per cent of this decline occurring in the first two months of 2009.

For an economy accustomed to phenomenal growth over the past 15 years – driven in large part by exports of mass-produced household products and consumer goods to (until now) ever-expanding Western markets – such figures ring alarm bells. In Beijing they have sparked fears of social and political unrest as unemployment has climbed and migrant workers are forced back into rural areas for subsistence living.

And across financial markets they have added to the apprehension that there is no evident locomotive that could pull the world out of a global economic slump. China’s economy is the world’s third largest after America and Japan. It has been the fastest growing major nation for the past quarter of a century, with an average annual GDP growth rate above 10 per cent. And its per capita income has grown at an annual average rate of more than 8 per cent over the past three decades, drastically reducing poverty.

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