The impact of novel coronavirus pneumonia on China's foreign trade


Covid-19 pneumonia will have a negative impact on China's import and export in the short term, but it will not change the basic trend of China's foreign trade pressure development in the long run. In addition, the epidemic will have a certain negative spillover effect on global international trade, and the spread of the epidemic will test the response ability of countries to a certain extent. However, with the restorative growth of China's economy and foreign trade after the epidemic, the development of global international trade will return to its potential level.

(1) In the short term, the epidemic has a certain negative impact on export trade

From the perspective of export structure, China's main export products are industrial products, accounting for 94%. As the epidemic spread to all parts of the country during the Spring Festival, affected by it, the resumption of work of local industrial enterprises during the Spring Festival was delayed, the supporting industries such as transportation, logistics and warehousing were limited, and the inspection and quarantine work was more strict. These factors will reduce the production efficiency of export enterprises and increase transaction costs and risks in the short term.

From the perspective of the return of enterprise labor force, the impact of the epidemic appeared after the Spring Festival, which seriously affected the normal flow of personnel. All provinces in China formulate corresponding personnel flow control measures according to the development of local epidemic situation. Among the provinces with more than 500 confirmed cases, in addition to Hubei, which is the most serious epidemic, it includes major foreign trade provinces such as Guangdong (exports accounted for 28.8% of the country in 2019, the same later), Zhejiang (13.6%) and Jiangsu (16.1%), as well as major labor exporting provinces such as Sichuan, Anhui and Henan. The superposition of the two factors will make it more difficult for China's export enterprises to resume work. The recovery of enterprise production capacity depends not only on the local epidemic control, but also on the epidemic response measures and effects of other provinces. According to the overall migration trend of the whole country during the Spring Festival transportation provided by Baidu map, compared with the Spring Festival transportation in 2019, the return of personnel in the early stage of the Spring Festival transportation in 2020 was not significantly affected by the epidemic, while the epidemic in the late stage of the Spring Festival Transportation had a great impact on the return of personnel.

Novel coronavirus pneumonia (WHO) announced the establishment of an international public health emergency (PHEIC) in January 31, 2020. Although PHEIC did not recommend travel or trade restrictions, some of the States parties were still implementing temporary control over specific categories of commercial exports in the world. Most of the restricted products are agricultural products, which has a limited impact on China's overall export in the short term. However, as the epidemic continues, the number of countries with trade restrictions may increase, and the scope and intensity of interim measures may also be strengthened.

From the perspective of shipping logistics, the impact of the epidemic on exports has emerged. In terms of volume, 80% of the global trade in goods is transported by sea. The change of marine shipping business can reflect the impact of the epidemic on trade in real time. With the continuation of the epidemic, Australia, Singapore and other countries have tightened the regulations on berthing. Maersk, Mediterranean Shipping and other international shipping company groups have said they have reduced the number of ships on some routes from mainland China and Hong Kong. The average charter price in the Pacific region has fallen to the lowest level in the last three years in the first week of February 2020, as shown in Figure 2. The index reflects the impact of the epidemic on export trade in real time from the perspective of shipping market.

(2) The long-term impact of the epidemic on exports is limited

The degree of impact on export trade mainly depends on the duration and scope of the epidemic. Although the epidemic has a certain impact on China's export trade in the short term, its impact is phased and temporary.

From the demand side, external demand is generally stable, and the global economy has bottomed out and rebounded. The IMF said that the global economic growth is expected to be 19.0 percentage points higher than that in April 2019, and the relevant risks must be reduced. At present, the IMF said that the global economic growth will be higher than that in March 2019, which must also reach 2.0 percentage points. According to the data released by Markit on February 3, the final value of the global manufacturing purchasing managers' index PMI in January was 50.4, slightly higher than the previous value of 50.0, that is, slightly higher than the ups and downs watershed of 50.0, a nine month high. The growth rate of output and new orders accelerated, and employment and international trade also tended to stabilize.

From the supply side, domestic production will gradually recover. Novel coronavirus pneumonia has been increasing its adverse impact on export trade. China has stepped up its anti cyclical adjustment efforts and financial and financial support. Various localities and departments have introduced measures to increase support for related enterprises. The problem of enterprises returning to work is being gradually solved. According to the statistics of the Ministry of Commerce, the overall progress of foreign trade enterprises' resumption of work and production has been accelerating recently, especially the leading role of major foreign trade provinces. Among them, the resumption rate of key foreign trade enterprises in Zhejiang, Shandong and other provinces is about 70%, and the resumption progress of major foreign trade provinces such as Guangdong and Jiangsu is also fast. The progress of the resumption of foreign trade enterprises nationwide is in line with expectations. With the normal production of foreign trade enterprises, the large-scale recovery of logistics and transportation, and the gradual recovery of industrial chain supply, the foreign trade situation will gradually improve.

From the perspective of global supply chain, China still plays an irreplaceable role. China is the world's largest exporter, with the world's most complete manufacturing industrial chain cluster. It is in the middle link of the global industrial chain and in the key position in the upstream of the global production division system. The short-term impact of the epidemic may boost the transfer of some production capacity in some fields, but it will not change China's position in the global supply chain. China's competitive advantage in foreign trade still exists objectively.

(3) The impact of the epidemic on China's imports is similar to that on exports

From the perspective of import structure, China's imported products are mainly Electromechanical, audio-visual equipment and its accessories, and mineral products. Among them, the main products are raw materials, parts, semi-finished products and fossil fuels required in manufacturing production. For the former, due to China's relatively stable position in the global industrial chain, as a large manufacturing country, if the export market shrinks, the domestic import demand for raw materials, parts and semi-finished products will shrink. However, with the control of the epidemic and the recovery of China's manufacturing production, the import volume of such products will rise accordingly.

As for the import of fossil fuels, taking petroleum products as an example, China is the largest importer of crude oil in the world, and the demand for oil is growing at a rate of about 5.5% per year. Affected by the epidemic, China's demand for petroleum products will decline significantly. The Capital Economics report says that if the impact of New Coronavirus's epidemic is comparable to that of SARS, it may reduce China's oil demand by about 400 thousand barrels per day. The recent decline in international oil prices also confirms the judgment of the international market on the decline of China's oil demand. According to wood Mackenzie's analysis and prediction, the impact of the epidemic on China's oil demand will focus on the first quarter of 2020, after which China's demand for oil products will increase significantly.

From the historical data, there is an objective phenomenon that China's import scale and export scale change in the same direction, which is determined by China's economic and foreign trade structure. Even during the spread of the SARS epidemic in 2003, the outbreak of the financial crisis in 2009 and even the Sino US trade frictions in recent years, the direction of China's import scale change is still basically in line with the direction of export scale changes. Although the epidemic has led to an increase in the import of some medical supplies, due to the limited amount of imports, its role in promoting the growth of imports is limited

Get the latest price? We'll respond as soon as possible(within 12 hours)

Privacy policy