The beginning of the year already heralded that coronavirus problems in China would strongly affect global trade relations, which would shrink. The lockdown in Europe deepened the crisis. What does trade with China look like after the first wave of the outbreak?
In the face of the crisis, the structure of trade relations between Poland and the Middle Kingdom is important. So far, we imported 110 billion PLN worth of goods from China in a year. Our exports were more than ten times smaller. First concerns about trade downturns, which appeared in Polish trade media at the turn of January and February, were not fully reflected in the real economy. This was compounded by recalling the situation in 2003, when economic disruption was caused by the emergence and spread of SARS.
Before the symptoms of the epidemic appeared in Poland, it was forecast that the most vulnerable industries were those using Chinese electronic equipment and textiles
It was feared that the end of production in China would force Polish buyers to look for suppliers of e.g. electronics on other markets, which would not be easy. However, it turned out that this demand was largely met thanks to warehouse reserves. In January the Aliexpress platform even increased deliveries to our country. In turn, the extinction of economic life in Poland coincided with its restoration in the Middle Kingdom, which made it possible to limit the effects of the crisis. Some analysts stress that the downturn in the economy coincided with the Chinese New Year, when factories stop working for two weeks anyway
At the same time, analysts predicted that Chinese exports in March 2020 will decline by at least 14% compared to the same period last year. In reality, the reduction in dollar-denominated export volume was only 6.6%. Considering the extent of interference in economic life – it was not a very bad result at all
The current belief is that there is a rather short-term disruption in trade with China, where the coronavirus has an impact. Early predictions suggested that while the global economy, and most likely Poland, would lose out from problems with the outbreak in the Middle Kingdom, the efficiency with which the Chinese authorities deal with the problem would be key
The exclusion from normal functioning of Hubei province, where the problems started, affected the automotive factories located there – Bosch and Foxconn (manufacturer of electronic equipment). Just as the whole world watched with alarm at the beginnings of the epidemic in China, so it was with incredulity that the radical methods of fighting the insidious enemy were put in place in the Middle Kingdom.
However, the situation of world trade in the prospect of a pandemic in China has provided an opportunity for further consideration. Admittedly, unless there is a sudden resurgence of the disease, the pessimistic scenarios will not materialize, but what if it were otherwise? After all, another pandemic disease could emerge in the future, and we face a trade war between the US and China. Many global players have recognized how detrimental it can be to be dependent on the supply of goods from one country. Looking for sources to diversify can be costly, but it is tempting to insure your business just in case of unexpected trade disruptions.
China also realizes the seriousness of the situation, and perhaps this will result in the expansion of Chinese companies abroad. Spreading production capacity to other territories as well may help them.
Back in May, one could read reports that predicted the collapse of globalization after the coronavirus, of which the first victim was to be global trade. Economic regionalization, the rise of protectionism and the decline of China were supposed to be the next symptoms of the crisis. Now, however, it seems that if anything is seriously threatening economic globalization, it is US-China relations rather than the results of the pandemic itself.
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