It started as a pay dispute at a southern Chinese toy factory. But it quickly turned into a riot as laid-off workers tapped into a network of friends and unemployed laborers who flipped over a police car, stormed into the plant and smashed office computers.

The latest violent protest to rock China's export machine was still simmering Wednesday at the massive plant, which makes Nerf toys for the U.S. company Hasbro Inc. The volatility underscored the urgency of China's efforts to keep stoking an economy weakened by the global financial crisis.

To protect jobs and social stability, the central government recently signed off on a multibillion-dollar stimulus plan. Officials have also been urging factories to avoid large layoffs and to try retraining employees to keep them off the streets.

"When times are bad economically, a small incident can rapidly become a big one," said local Communist Party official Guo Chenming, who was monitoring the situation Wednesday outside the restive toy factory in the city of Dongguan.

Tempers began flaring Tuesday when the plant's Hong Kong owner, Kader Holdings Company Ltd., prepared to lay off 216 migrant workers at the factory that employs 6,500. About 80 senior workers claimed they were getting shortchanged on their severance pay, and they mobilized a mob of 500 — mostly other unemployed workers and friends, Guo said.

The workers battled security guards, turned over a police car, smashed the headlights of police motorcycles and forced their way through the factory's front gate, Guo said. They went on a rampage in the plant's offices, damaging 10 computers, the company said.

The account was confirmed Wednesday by several of the 200 or so jobless laborers peacefully milling around the street in front of the four-story factory complex covered in soot-stained white and green tiles. Small groups of workers inside the factory pressed against glass windows and stared at the crowd below. When their shift ended, they flooded into the streets and mixed with the angry workers.

"The factory's management and the local officials really look down on the workers," said one laid-off worker who would only give his surname, Qiao, because he feared criticizing the company might jeopardize his chance of getting any compensation.

Qiao accused the police of igniting the riot. "The workers just got angry because the police hit them first," said the 30-year-old migrant from the southwestern province of Sichuan, devastated by last May's monster earthquake.

Guo doubted the allegation, saying it would be foolish for the police to incite such a massive crowd. He also said the 80 workers didn't get full severance because of bad performance. But he added that the company didn't fully understand new labor laws and was also to blame.

Kader's executive director Ivan Ting said the workers were compensated beyond what is required by Chinese labor law, but did not give a figure. A company statement said the toymaker is financially sound.

Basic assembly line jobs at the factory pay only $112 a month, and overtime is rare now that most of the Christmas orders have been fulfilled. Shipping containers on trucks in the factory's courtyard were loaded with Hasbro boxes containing Nerf toys.

Whipping up a mass protest can be easy in this part of southern China — called the Pearl River Delta in Guangdong province. It's one of the country's biggest manufacturing bases, and most of the residents are migrant workers who work long hours in factories and live in crowded dormitory rooms.

News of protests or mistreatment quickly spreads via mobile phone text messages. Crowds can quickly swell with gawkers who eventually join the action. Workers from the same provinces often band together and support each other.

It's a major concern in major industrial zones in Guangdong, which has been hit hard by a series of factors: rising costs of wages and raw materials along with currency fluctuations and the global financial crisis. More than 7,000 companies in Guangdong have gone bust or moved elsewhere in the first nine months of the year, the official China Daily newspaper recently reported.

American businessman David Levy said local officials are intensely concerned about the economy. They have been visiting factories to make sure the plants are financially healthy and not ready to disgorge hundreds of angry workers onto the streets, he said.

But Levy, a general manager Lastar Electronics Co., Ltd., which makes cables in Dongguan, said most reports of plant closures are overblown or involve small operations that had problems before the recent global economic woes set in.

"What I usually hear is, 'Yeah, we're down 20 to 30 percent.' You can take that hit unless you have a problem to begin with," he said. "All of the turmoil is not bubbling out into the streets."

But last month, one of Dongguan's biggest toy factories shut down, laying off 7,000 workers who protested in the streets for days demanding unpaid wages. The plant made toys for Hasbro and Mattel Inc.

More closures will come in the next few months because of the global financial turbulence, said Lo Foo-cheung, vice president of The Chinese Manufacturers' Association of Hong Kong. Lo said companies will be cutting workers despite the government's warnings to keep them.

"At the end of the day, it's a business decision," Lo said. "It's all about survival."