"Prices are slumping. This trade is getting harder and harder," said the 45-year-old, dressed in an old blue Mao suit, as he pulled his tricycle along the roads of central Beijing looking for marketable trash.

Granted, life was never easy for the former peasant from central China's Henan province, who like millions of others is seeking a better life in the big city.

For more than a decade now, he has got up before dawn to sift through garbage bins in front of the capital's apartment blocks, hoping to find newspapers or plastic bottles that he can sell for the scrap value.

But while it has always been hard to eke out a living from this surprisingly competitive business -- usually, it is a race to get to the full garbage bins at the start of the day -- it may now be becoming impossible.

"Now I cannot even earn enough money for my daily expenses," said Li.

Daily income has dropped to below 30 yuan (4.4 dollars), less than half what he made as recently as in May. To put that in perspective, a bowl of noodles or a couple of buns stuffed with meat cost three to five yuan.

Amid the global economic crisis, prices of the main household waste recycled in China, such as plastic, paper, steel and aluminium, have plummeted by more than 60 percent since August.

The sharp falls now apply across the industry.

"People swore at me for giving them too little for their waste," said Ji Yuemei, a scrap merchant with a small operation in a Beijing residential block who buys waste from people such as Li and sells it on to recycling factories.

Ji pointed to a white van parked outside her shop, filled with used shoes and other refuse, saying she would not resell the items until their prices went up again.

"Why should I if I'm losing money selling them?" she said.

The troubles bothering Chinese waste collectors are a microcosm of a more general plight affecting the world's fourth-largest economy, now in the middle of a rare slowdown caused by the global crisis.

Growth in the Chinese economy slipped to nine percent in the third quarter, the lowest quarterly figure since the middle of 2003, and the rest of the year could be even worse.

In October, factory output growth fell abruptly to 8.2 percent, less than half of the 17.9 percent booked in the same month last year.

"The entire recycling industry is losing money. The larger the company is, the bigger its losses," said Liu Jianmin, chairman of the China Recycled Resources Association.

The price of scrap steel has plunged to less than 2,000 yuan a tonne from 3,000 yuan a few weeks ago.

Leading steel producers including Baosteel and Shougang Group have started cutting back output after 23 of the 71 large and medium-sized steel-makers posted losses in September, state media reported.

The plastics industry is having a hard time as well, with exports growing by just three percent in the first 10 months of the year, compared with the 9.2 percent rise in the same period in 2007, customs data showed.

To make things worse, domestic demand also contracted as a result of a slowdown in key sectors such as autos, toys and home appliances.

Until recently, US industrial consultancy BCC Research expected the amount of recyclable material processed in China to rise to 158.6 million tonnes this year from 142.3 million tonnes last year. No longer.

"The crisis will slow down the growth, because domestic demand and exports will be affected," said Li Baijun, a Shanghai-based freelance analyst with the firm.

Li Xincun, the scrap collector, said he had already decided what to do next: return to the family farm if things do not get better fast.

"And I'll probably stay there," he said, shaking his head in despair. "And not come back to the city."

earlier related report
China not facing major crisis, slowdown moderate: expert
China can weather the financial storm because the economy has no major bubbles while a year of policy adjustments have tamed the property market, a top central bank adviser said in comments published Monday.

The economic slowdown is a "benign correction", the official Shanghai Securities News quoted central bank adviser Fan Gang as saying.

"Slowdown in the economy is inevitable at this stage, but China remains one of the fastest growing economies in the world," Fan said .

Fiscal tightening policies aimed at preventing the economy from overheating have squeezed out bubbles in the real estate sector over the past year, he said.

"There are no big bubbles in China's economy at present. With no big bubbles, there will not be big crisis in future," Fan was quoted as telling a forum hosted over the weekend.

Fan said China had resources to navigate through the financial turmoil such as abundant foreign exchange reserves and tax revenues.

China's foreign exchange reserves, already the world's largest, rose to 1.9056 trillion dollars by the end of September.

China's property market has boomed for the past few years, prompting a series of government curbs to deter speculators. But recent data show property prices grew in October at the slowest pace in more than three years.

Beijing has announced a range of measures to prop up the slowing sector, including lifting stamp tax on purchases and cutting interest rates on mortgages for first-time home buyers.

It has also removed a value-added tax on land in property sales.

Further efforts to encourage purchases will be introduced in near term such as making it less expensive for families to buy second homes, China Business News reported Monday, citing government officials.

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