Some 70% of the world's Christmas ornaments and other paraphernalia now originate in officially atheist mainland China. Tinsel, Santas, mistletoe and artificial trees of every shape and hue are churned out at a relentless pace by thousands of factory workers in Guangdong, Zhejiang and Jiangsu provinces.

According to the China General Administration of customs, Guangdong on its own exported more than US$620 million worth of Christmas products in 2004. For the country as a whole, the figure was over $1 billion.

Even the White House now celebrates a "Made in China" Christmas. In 2003, seven of the trees adorning the US president's residence were manufactured in China. In fact more than two-thirds of the world's artificial Christmas trees are made in the single city of Shenzhen.

As winter's icy tentacles lead into Christmas, Santa's Chinese elves are enjoying a bit of a quiet period after having toiled for the majority of the year. "Our busy period is really February to October," says He Li, assistant sales manager of Yiwu Festival Gifts Company. The company has annual sales of over $12 million and employs between 800-1,000 workers. It exports 90% of its products to the US, Russia and Chile and specializes in manufacturing hanging toys, trees and Christmas gifts.

The city of Yiwu in central Zhejiang province, where the company is located, is today one of the Christmas industry's global centers. The city's gargantuan Futian market, spread over 3.7 million square feet, is a primary source of the world's knickknacks. Last year, Yiwu posted sales of $2.5 billion, $1.5 billion of that in exports.

Like many places in China, it has abundant cheap labor. Two-thirds of the 316,000 farmers in the surrounding countryside have left the land to become part of Yiwu's mega-export machine. An additional 400,000 migrant workers have come from other provinces.

Yiwu's peasant-workers aren't the only ones thankful for Christmas. According to Xinhua, China's official news agency, more than 7,000 farmers living in Xiaoguanzhuang town in Jiangsu province collectively manufactured some 100 million Christmas decorations for export in 2004, earning close to $48.3 million. The town now has 45 large businesses and more than 400 processing workshops producing angels, trees and reindeer.

Many of the Pearl and Yangtze River delta Christmas product manufacturers have their own websites in English and Spanish, and some are starting to branch out into other holidays, such as Halloween. But competition is stiff. "We have begun to feel the heat a little in the last two years because there are so many small factories that have set up shop in our city, driving down prices," says Edith Yan, the sales representative of Decoart Design & Manufacturing Ltd, located in Huizhou, Guangdong.

Recent labor shortages in the Pearl River Delta have meant higher salaries. Both Guangzhou, the capital of Guangdong, and Shenzhen pushed up their minimum wages by a third earlier this year, to $83 per month. Combined with the rising costs of raw materials like plastic, profit margins are suffering.

A six-foot-high tree in Yiwu's Futian market for example, is priced at less than $4. A package of six sparkling ornaments costs about 25 cents to make, and sells for 36 cents.

Concerns regarding product quality and intellectual property rights have also begun to hinder the mainland's exports to Europe. According to Xinhua, Guangdong's Christmas exports actually fell by 19.6% last year, compared to 2003.

For the country as a whole, exports fell by 14.7%. Nonetheless, Yan says that large companies like Decoart are weathering the storm with relative ease. With annual sales of over $10 million, Decoart's customer base remains stable. But she says companies must constantly innovate to gain an edge.

According to a recent report on globalsources.com, a sourcing information website that specializes in China, the over 1,000 suppliers of Christmas lights in China are releasing "unique designs in diverse colors, styles and effects with greater frequency, to remain competitive amid an intense price war". Laser crystals and holograms are being pressed into use in the unrelenting quest for novelty.

And while exports may be slowing down, domestic demand is picking up. Two percent of Decoart's Christmas decorations are now sold domestically, according to Yan. China's Communist Party banned public Christmas celebrations at one point in 1993. But today, rather than being judged as a vehicle for insidious ideological pollution, Christmas is seen by Beijing as an opportunity for encouraging consumer spending.

Hotels, restaurants and shop fronts across the flashier Chinese cities are thus bedecked in wreaths and glittering Christmas trees. Usually surly salespersons in supermarkets are transformed into sexy Santa's helpers in red and white. He of Yiwu Festival Gifts says that while 10 years ago, most people in Yiwu would have been hard pressed to even say what Christmas was, today's youngsters celebrate the festival by decorating their houses and exchanging presents.

For the bulk of the toiling "elves" in southern China's factories, however, Santa Claus remains as alien as if he really were at the North Pole. Asked whether the company told its workers anything about the festival for which they spend their days and years producing baubles, Yan answers, "Christmas is not a big traditional festival here and we don't celebrate it. Our workers are mostly middle-aged women who don't need to know anything about it."

Pallavi Aiyar is the Beijing correspondent for the Indian Express newspaper.