Thirty-two automotive wire and cable manufacturers in east China’s Shandong province recently received a letter of thanks from South Korea, which praised their effectiveness in production resumption amid the novel coronavirus (COVID-19) epidemic. The letter reflected China’s deep integration into the global industrial chain.
Wires and cables are very important automobile parts. More than 90 percent of wire and cable suppliers of South Korean automobile manufacturers are located in Shandong. Therefore, their resumption of production is of vital importance for the auto industry in South Korea.
The COVID-19 epidemic had brought about short-term challenges to China’s manufacturing industry in the early stages of the outbreak and temporarily interrupted the global supply chain. However, as enterprises have speeded up resumption of work, China’s export sector is projected to return to normal and even bounce back to make up for the losses caused by the suspension of production and impeded logistics.
China will remain the stabilizer of the global supply chain.
At present, Chinese governments at various levels have rolled out a package of policies to attract and stabilize foreign investment, and spared no effort to help enterprises restart production.
The Chinese governments have also endeavored to efficiently guarantee a stable supply chain, prioritize production resumption of leading foreign-funded companies and supporting businesses on important position of the global supply chain, and actively coordinate and promote upstream and downstream enterprises in key industries to resume work.
Foreign trade companies in China are accelerating resumption of production and improving their capability to fulfill contracts signed before the COVID-19 epidemic, Li Xingqian, director of foreign trade department under the Ministry of Commerce told a news briefing on March 13.
Supported by the government’s policies, nearly all major foreign trade firms in Zhejiang and Jiangsu provinces and Shanghai have resumed production, according to Li. As a result, the global supply of important materials has been effectively guaranteed and the safety and stability of the global supply chain has been ensured to the maximum.
In addition, Chinese enterprises have played an active role in ensuring the reopening of overseas-contracted projects and the supply of materials, helping foreign suppliers resume production capacity, promoting upstream and downstream enterprises to resume normal operation and stabilizing the global supply chain.
The COVID-19 epidemic once again shows that China and the world are economically interdependent. It also fully demonstrates the resilience of China’s supply chain and its unique position in the global industry.
By accelerating resumption of production amid challenges, Chinese enterprises have not only effectively alleviated the panic of the world market about the risk of supply chain disruption, but also consolidated their role of “stabilizer” in the global supply chain.
As the COVID-19 epidemic is gradually subdued in China, the market panic decreased. China still remains the most important destination for the majority of foreign-funded companies, who are always confident in investing in China and have not changed their investment strategies.
The annual China Business Climate Survey released by the American Chamber of Commerce in China on March 10 found that less than 20 percent of member companies have transferred or are considering moving their production capacity out of China – a percentage that has been declining in the recent three years. The figure indicates the impossibility of massive relocation of supply chains from China.
China’s timely and efficient resumption of production effectively guarantees the smooth and orderly progress of international trade and production capacity cooperation, highlighting the country’s important role of “world factory” and a global supplier.
China’s proportion of global exports rose to 10.6 percent in 2018 from 4.8 percent in 2003, and its proportion of the value added of global manufacturing increased to 30 percent from 8.4 percent in the same period. The importance of major export products, including electronic products, computers and communication equipment in the global supply chain has risen significantly.
The impact of the epidemic on China’s supply chain is temporary and phased. China is working hard to stabilize the fundamentals of foreign investment and foreign trade, coordinate relevant departments to ensure supplies to foreign companies in terms of materials, labor, water and power, and logistics, so as to quickly and effectively resume supply for production.
In the long run, with the support of a series of policies, the self-repairing ability of China’s supply chain is continuously improving, and its indispensable position in the world will not be changed by the impact of the epidemic.