Updated: Nov 19
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Although international-scale delivery delays could very well weigh on future export opportunities, far from being pushed to the background, China's part in the global supply chain has been at the forefront in the early months of 2021.
Close to two years into the crisis, and despite the decline in overall demand, Chinese exports have proven to be a key driver in the slow but steady economic recovery of the United States, the European Union, and the United Kingdom.
China: from the epicenter of a world crisis to surfing the pandemic wave
Back in December 2019, little did anyone know that a new unknown virus originating from China was about to plunge the entire world into unprecedented paranoia. Ironically, however, no country has managed to take the helm and weather the economic storm quite like China itself.
Consequently, the country seems to have increased its market shares substantially. Over the last few months, this progression seems to have been equally reported for goods of various classes.
Improvement in all production sectors
In the first quarter of the year alone, China recorded an overall staggering 18% increase in total GDP.
Its primary sector, accounting for 5% of China's GDP, rose by 8.1%.
Its secondary sector, no less than 37% of its GDP, grew by 24.4%.
58% of China's GDP is attributed to the country's tertiary sector, which showed an increase of 15.6%.
Working towards positive growth
Although minimal, the year 2020 already augured promising growth. Since then, the further betterment of sanitary conditions has allowed China to stabilize its economy and get back rather firmly to pre-pandemic export projections.
Last April, 43 billion dollars worth of trade surplus was generated, attributed to China's lucrative dealings with member countries of the Association of Southeast Asian Nations. Now, to stay the course and further secure growth, China is faced with the necessity to redouble efforts by maintaining its rate of exports while preserving balance by improving domestic consumption.
A success that is not new
Ever since the 80s, China has been able to pull off a wowing yearly 9% growth, estimated to be reduced to 6% by the end of 2021, however. Commandable effort that saw an unfathomable amount of factories sprout like bamboo shoots.
The country was the least expected to move so brilliantly into the 21st century. So bloodily ravaged by long decades of political upheavals and territorial instability, the prognosis was not at all favorable: the 1911 revolution, the warlord era, the nationalists-communists civil war, the second sino-Japanese war, the Second World War, the proclamation of the People's Republic of China, the 30-million Great Leap Forward deaths, and the 50-million Gang of Four Cultural Revolution deaths.
By 1978, following the creation of special economic zones, Deng Xiaoping initiated an administrative reform that propelled China into modernity.
China’s recipe for success: adaptation to change
A little bit of unpacking and we soon discover why, by March 2021, China recorded a 32,3% rise in international sales. Struck by the pandemic, not only did the world start masking up but it more impactfully went into a large-scale restructuring of the way salaried work used to be. Along with medical equipment, China seized the opportunity to commercialize teleworking-focused electronic goods.
As early as Spring 2020, China had already got things under control. Compulsory mask-wearing and country-wide testing helped hasten return to pre-pandemic times. In just a few months, the country tackled the issue.
With an unknown virus on the loose, this top-of-the-class performance is evidence of the vital importance of international trade for China, which, should it have collapsed, would have brought along an entire system in its fall.
Now that other parts of the world, held back by the desire to prioritize mass vaccination, are beginning to get their heads above the water, it begs the question: will China's exports economy consequently decelerate?
China faced with unexpected challenges
In reality, speculations aside, China's Covid-19 exports growth rate seems more untenable than not in the long run. As developed economies are progressively reopening to trade, the country's pandemic peak may have been a once-in-a-lifetime occurrence, as the results reported in the second quarter of 2021 appear to suggest: +7,9% in comparison.
To blame are several determining factors, among which is the resurgence, back in Spring of this year, of an outbreak in Guangdong, a crowded southern province loaded with factories. Focused primarily on ensuring domestic consumption, exports have been pushed to the background.
Sharp rise in raw materials
While an undoubtedly decisive export actor throughout the pandemic, China has to enter a new phase presently, as SMEs nationwide are challenged by ever-increasing raw material prices, seriously putting a damper on their post-covid economic rebound.
Sino-American trade relations playing an essential role in China's annual economic growth, recent unprofitable prices quoted for silicon - a component used to manufacture electronic chips - make it hard for the country to fulfill demand.
Can its crisis management strengthen the regime’s legitimacy?
Past purely mathematical equations, and as for any crisis, the solution seems to lie more reliably in the level of faith nations have in the future. Households reducing their precautionary savings, enterprises actively doing their part to boost the job market, and people leaving it to the concerned authorities to handle the situation are all telltale signs of smooth transitions.
The latter, unfortunately, is where sanitary authorities appear to be failing. After close to two years of nerve-racking anguish, the Chinese vaccine - said to be the key to solving the crisis - is known to be insufficiently effective against Covid-19. The once eager anticipation of a Holy Grail that would reopen borders and kickstart the economy has turned into a serious blow to the morale.