Impact of foreign prevention and control measures on China’s exports

Impact of foreign prevention and control measures on China's exports

The impact of the new coronary pneumonia epidemic on a country ’s economy can be answered from China. China experienced the earliest process of epidemic outbreak, development, climax, control, and decline. Countries around the world have widely adopted China’s prevention and control measures. The most important thing is to restrict population movement and economic activities. At present, this is also the most effective measure. The economic cost is also greater. According to the 2020 economic data released by the National Bureau of Statistics of China, the total retail sales of consumer goods for January-February was 521.13 trillion RMB, a nominal decrease of 20.5% year-on-year. Among them, the catering industry, clothing, shoes and hats, needle textiles, daily necessities, household appliances and audio equipment, furniture, automobiles, construction and decoration materials decreased by more than 30% year-on-year, and the consumption of petroleum and its products decreased by 26.2%. However, consumption of food, food and beverages did not decline, maintaining a growth of more than 3%.

In terms of fixed asset investment, from January to February 2020, China’s fixed asset investment (excluding rural households) was 333.23 billion RMB, a year-on-year decrease of 24.5%. In terms of imports and exports, from January to February 2020, China’s total import and export value of goods trade was 4.12 trillion RMB, a year-on-year decrease of 9.6%. Among them, exports were 2.04 trillion RMB, down 15.9%; imports were 2.08 trillion RMB, down 2.4%.

If we consider that China ’s main prevention and control measures will take place after January 20, assuming that the growth rate of consumption, investment, imports and exports in the first 20 days of January is consistent with economic growth in 2019, the overall negative impact of the epidemic on residents ’consumption during the prevention and control phase will be approximately 33%, the negative impact of fixed asset investment is about 40%, and the negative impact of import and export is about 17.4%. Overall, the negative impact of the epidemic prevention and control measures during the closure of the city on China’s economic GDP was about 33%.

The overall impact of the current epidemic on international trade is greater than in the previous period. January-February was mainly due to China ’s shutdown, which caused orders not to be issued, and foreign economic activities and demand were less affected; since March, the rapid outbreak of foreign epidemic has spread and triggered A series of prevention and control measures restricting population movements and economic activities in various countries around the world have an impact on China’s exports in three aspects: one is the direct impact of the decline in foreign demand, and the other is the lack of supply of raw materials and components for the production of exported goods due to the stagnation of foreign economies The third is the obstruction of trade logistics caused by border control and restrictions on population activities in various countries. Among them, the impact of falling demand may be the main impact.

Quantitative analysis of the impact of foreign epidemics on China ’s exports can be started from two aspects. The first way is to assume that the GDP of different countries is affected by the epidemic, and then estimate the decline of China ’s exports based on foreign GDP and the elasticity of China ’s exports. The overall negative impact is very dependent on scenario analysis. The second method is to estimate the economic impact of epidemic prevention and control based on China’s economic data from January to February, assuming that foreign prevention and control measures have similar economic impacts, and then estimate the impact on Chinese exports.

This article refers to the second estimation method, assuming that the negative impact of foreign epidemic prevention and control measures on April to May is similar to that of China, and the decline in imports from China is consistent with the overall economic decline, that is, the import demand of the main trading countries with severe epidemics, a decline of 33%, and assuming that the decline in demand in other countries is half that of serious countries, then the decline in China ’s exports from April to May is about 25.5%. If further consideration is given to trade logistics restrictions and the rapid spread of the epidemic in other countries around the world, the actual negative impact will be even greater.

Leave a comment

Your email address will not be published. Required fields are marked *