China's role as the world's factory will not be changed due to the outbreak of the novel coronavirus. On the contrary, thanks to its enormous market and complete industrial system, foreign capital and investment that do not want to withdraw from China will enhance China's position in this regard.
Export-oriented enterprises have to face significant challenges in the short term as the demand for Chinese intermediate and capital goods has declined under the impact of the spread of the virus worldwide. However, the demand for consumer goods will increase, unleashing new potential for exporters.
According to the General Administration of Customs, China's foreign trade volume totaled 9.07 trillion yuan ($1.28 trillion) in the first four months of this year, declining by 4.9 percent year-on-year. The country's exports dropped by 6.4 percent in the first four months, a decrease narrowed by five percentage points than that in the first quarter, to 4.47 trillion yuan.
Although China's exports fell further in March, falling 3.5 percent, that still signaled recovery as they sank by 17.2 percent in January and February. Along with the resumption of overall work and production, companies are rushing to complete export orders. Meanwhile, medical products and protective equipment are in high demand. Therefore, the demand of the foreign market for Chinese products remains despite their decreased overall needs. As two of the three major categories of exports, capital goods are the main force, while intermediate goods make up a small share. In response to the COVID-19 pandemic, some economies have adopted lockdown measures, suppressing production, people's activities and exporting capital products.
Overall consumer goods are not affected, particularly in the medical and healthcare sectors. Maintaining a steady upward trend since February, exports of epidemic prevention materials increased significantly in April, thus easing the decline in foreign trade.
China's imports are reviving, but the countries imposing lockdowns are unlikely to keep placing orders with Chinese companies, bringing considerable uncertainty to the trend.
In this context, the International Monetary Fund has forecast that global exports this year will fall 11 percent. China, as a leading exporter, will face mounting downward pressure, with its exports declining about 10 percent. Thereby, export-oriented companies should respond to the trend with specific plans and try to find the potential in the crisis, especially for consumer goods, instead of losing confidence because of the decreased orders in the short term.
To solve future export difficulties, enterprises engaged in foreign trade should continue to develop markets in developed countries and meet their demand for final consumption goods. At the same time, they should seek to tap the potential of demand in the BRICS and ASEAN countries, and other emerging economies, as this can provide more space for the expansion of China's exports.
This year, the Association of Southeast Asian Nations has surpassed the United States and the European Union, to become China's largest trading partner. With the progress of the China-ASEAN Free Trade Area established in 2010, exports to ASEAN countries account for 15 percent of China's total exports. Meanwhile, the proportion of China's trade with Belt and Road countries is also growing. That calls for the Chinese government to offer more support for the China-Europe freight trains that traverse the Belt and Road routes and accelerate the transfer of the export processing trade industry from the East to the central and western regions.
Chinese enterprises should also cultivate new business models and types, for instance, digital trade and e-commerce. In the first quarter, e-commerce enterprises, including JD.com and Taobao, realized export increases amid the overall downward pressure. Now, China has listed the first 12 national digital service export bases to speed up the development of digital trade and the application of digital technology, and it has established comprehensive pilot zones for cross-border e-commerce. As the China Import and Export Fair, also known as Canton Fair, gears up to go online, the country should also help companies, including micro, small and medium-sized enterprises, to gradually adapt to e-commerce.
Although the shadow of COVID-19 still lingers, China's economy will continue to grow over the long term and boost the world economy.
This year, major economies, including China and the US, will undergo economic and trade fluctuations due to the pandemic. But it can also become a milestone for China's economic growth.
The author is deputy dean of the National School of Development at Peking University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.