There seems to be good news in terms of economic recovery from our COVID-19 slump. Stock markets worldwide are rising as Chinese trade data suggests that the country has avoided a downturn from the pandemic. Investors are anticipating the worldwide economy will recover sooner and later. This news is undoubtedly welcome after oil prices plunged significantly earlier on. China’s export only fell by 6.6% in March year-to-year rather than 14% as expected, according to official data. Although the World Health Organisation is still calling for caution, investors are taking it as a sign that the current lockdown solution is working.
However, we can’t expect a full-fledged recovery in China anytime soon. Shipments in and out of the country are shrinking as the COVID-19 situation has dwindled demand in many economies. With business activities around the world at a standstill, we would need some time to see an actual economic recovery in China. The timeline will depend on when the world economy recovers from COVID-19, and in what way. A key in this question is when supply and demand for goods, as well as movement between borders, will resume. There are many occasions of abruptly cancelled sailings out of China. With customers buying less worldwide, there is less demand for manufactured goods, causing a 10% increase in blank sailing for sea freights. Also, companies are desperately trying to import products from other countries to China in fear of further cross-border lockdowns. With a diminished number of airlines flying out of China, air cargo prices are significantly higher than before. They will remain so soon.
Chinese authorities are stepping in to aid eCommerce exports by identifying the sector as one of the country’s pillars in foreign trade. The government is setting up 46 new eCommerce pilot zones, accommodating the 59 existing zones. Businesses within the zones will enjoy preferential policies, such as tax exemptions. This measure is a bid to keep the country’s industry and supply chains, as well as the job market, afloat. The Ministry of Commerce has also put out measures to incentivise traditional businesses to go online and use international platforms. Alongside its efforts, China will also streamline its clearance procedures, improve logistic service and advance free trade agreement negotiations to boost trade. China is clearly preparing a robust comeback. We shall see the results once the worldwide economic conditions become more favourable.
Since 30 March, most Chinese exporters have resumed 70% of their capacity. The timeline and extent of China’s success in reviving its manufacturing and supply chain capabilities will depend on other nations’ consumer confidence and demand for goods. As eCommerce or supply chain operators, we need to continue monitoring the situation and be prepared to adapt.