China Looks to its Domestic Market for Hope in Global Recession

On the edge of Beijing, 1,500 workers pack four factories each the size of a football field, kicking their sewing machines into high gear at the Rontex clothing company. Their steam irons are hot, and so is the Chinese economy.

While economies around the world are facing flat or negative growth in 2009, China is forecast to grow by eight percent. And with international sales diving in the past year, China is hoping it can turn inwards to its domestic market of 1.3 billion people to pick up the slack.

But China — a country in which people save an average of 28 percent of their disposable income — has a long way to go before its domestic market joins the 'made in China' fan club.

VIDEO: Dana Lewis Reports From China

China's exports dropped 23% in the past year. At the Rontex clothing company, the $23 million export business fell 10 percent. A whopping 80 percent of the company's business comes from North America, and with the United States and Canada in long-lasting recessions, Rontex, like other Chinese companies, is hoping to unleash the consumer power of its domestic market.

For some companies the domestic market has already cushioned the fall. The Vice President of Lenova — a company that bought out IBM's pc — tells FOX News that U.S. sales were down 17 percent this year, but sales in China shot up 15 percent. For the company's management, this is just the beginning of a new trend.

VIDEO: Dana Lewis Reports From China.

"China alone is going to be 20 percent of the world's market in maybe four years," Chen Xu Dong, Vice President of Lenova, told FOX News.

But for companies like Rontex to shift from an export market and start selling substantially more in China, something very simple has to happen. The salaries of all Chinese workers have to rise, so that laborers become more serious consumers. The fact is that salaries have not gone up in China and a lot of workers have lost their jobs in the economic crisis.

VIDEO: Dana Lewis Reporting From China.

The pervasive practice for Chinese employees is to save. Lena, a Chinese woman who makes her living as a ballroom dance instructor, tells FOX News that she loves to shop, but she always saves 35% of her pay check.

"My mother like that too," Lena told FOX News. "It's traditional - it's gene. We need safe life security," Lena said.

Similiarly, Hua Yi Piao, a migrant worker who makes about $150 a month, told FOX News that his pay is "not enough to live on, but I send the money home so my brother can study. Work is hard to find."