He has stretched out his meagre savings for nearly six weeks, but finally, and with only a few hundred yuan left to his name, Gang Wei is giving up. He borrows a friend’s mobile phone and makes the call he always dreaded.

“I’m leaving tonight,” he says, filling a grey plastic sack with his possessions. “I’ve got some things to sell.”

For Mr Gang, who used to work at a company pressing radio controllers for toy cars, this admission of defeat ends a personal dream that began three years ago, when he left Jiangxi and moved to Guangdong. For the Chinese Government watching nervously in Beijing, the movements of men such as Mr Gang – 23 years old and deeply disillusioned – pose a darkening threat to national ambition. This exodus was absolutely not part of the plan.

The country’s astonishing growth story has been driven in large part by the more than 230 million people, mainly in their twenties, who have left their farms and migrated to jobs in the country’s expanding urban sprawls. The Government’s own calculations suggest that these cities will, in combination, need to create 24 million jobs a year to sustain the pace of migration – even before the global economic downturn, that appeared implausible; now, it seems impossible, especially given the pace with which people are heading back to their parents’ farms.

Only three months ago, the small corner of Dongkeng where Mr Gang worked was yet another booming facet of the mighty Chinese industrial growth story: five huge factories, each employing thousands of workers, would churn out toys, electronics and shoes late into the night, much of it heading directly to the United States and to the shelves of stores such as Wal-Mart or the now-collapsed Circuit City. Smaller factories around them would supply parts, and services.

At the end of each shift, the surrounding cafés and restaurants would spill out into the streets and the shops would hum with business. It was this seemingly unstoppable throb of commercial activity that drew Mr Gang, and ten million migrant workers like him, from rural China into the urban sprawl of the Pearl River Delta.

Today the same corner of Dongkeng is a ghost town, its streets strewn with the raw plastic pellets that once fed the presses. Entire rows of shops are shuttered: those that remain open blare invitations to closing-down sales. The staff of local barber shops, pool bars and mobile phone showrooms stand forlorn and without customers. In the centre of town, the biggest crowds swarm the walls of work-placement offices in a desperate scramble for jobs.

“I can’t believe how many people are leaving and giving up. Of course the global economy is causing all this trouble, but it can’t be impossible to find work here if people just lower their expectations,” Yang Wu, a former plastic mould operator, said. “People got too used to good wages here.”

The gates of the vast ENlight factory, which once employed Mr Yang and produced hard disc casings for IBM and Dell, remain tightly locked and plastered with official notices of bankruptcy. Other former workers talk darkly of a tip-off given to the factory security staff the night before the closure – those men supposedly had a few precious hours to strip the place of all the valuable equipment before the gates slammed shut. Broken bottles outside a closed factory next door attest to a brief but savage protest by workers who arrived two weeks ago to find out the hard way that the plant had closed and they were jobless.

“Of course I’m angry. The owner of this place has run off with the money. There are rumours that the Government is going to help us get our last pay package, but I haven’t seen anything yet,” said Chenglei Gao, who arrived from Sichuan province five years ago. “Then, the Government promised construction jobs [part of the four trillion yuan (£392 million) stimulus package announced two weeks ago] and we haven’t seen those, either.”

Creeping fears of this sort of unrest have prompted a series of government efforts to calm the situation. Local authorities, especially those in Guangdong, have been told to assist the victims of unpaid wages and layoffs, with a priority placed on ensuring stable employment.

Yet throughout Guangdong province, there are similar small pockets of despair: official estimates of factory closures differ wildly from other accounts. It is increasingly clear, though, that the small and medium-sized businesses that pump the economic lifeblood of cities such as Dongkeng, are in serious trouble and that some 10,000 have probably closed in the wider Dongguan region over the past six weeks.

It is a shift of fortunes that has stunned the most pessimistic economists: at what should be a prime period for mass-producing the goods to meet US and European Christmas shopping demand, the global downturn has swooped destructively into the province of Guangdong – the “workshop of the world” and the region responsible for almost a third of China’s exports. Several analysts, faced with increasingly strong evidence from the real economy, predict that Chinese GDP growth will tumble to about 5.5 per cent next year, below the estimated “break-even” level of 6 per cent required to sustain the investment and migration of recent years.

Domestic demand in China has helped to soften the blow so far, but few believe that the cushion will last much longer. In Shanghai, some estate agents are offering a free Volkswagen with each new flat purchase – and are still not finding buyers: an unpromising sign for a domestic consumption rise led by the wealthier middle class.

Until Wednesday, Jia Yen, 26, and her cousin Lanfen worked in a factory producing uniforms for other factory workers in the region. On Thursday they were told that the plant would be closed indefinitely.

“I think that if our factory has closed, it must mean many factories have closed. The only other jobs on offer here use skills we don’t have,” Ms Jia said. “We have enough savings to spend one month looking for jobs here, then we will go back to Hubei province.”

Within 15 minutes of Mr Gang’s unhappy phone call, the recycle man arrives at the nearly deserted dormitory. Mr Gang crams two shirts, a jacket and a tiny assortment of other items into a holdall. The plastic sack, which contains pots and pans, a few plastic dishes, a pillow and some blankets, is handed to the recycle man. The bag is weighed and exchanged for about £4. Mr Gang looks around the dormitory, then heads towards the bus station. “Two months ago we had the Olympics,” he says, “and now look.”

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