China’s Exports Take a Hit as the Country Faces a New Wave of Coronavirus Cases

Another wave of confirmed COVID-19 cases in China has presented significant challenges for some of the country’s manufacturers, who have already been reporting dwindling orders and a decline in exports amid the pandemic.

According to China’s National Health Commission, on Sunday China had 39 new cases of the coronavirus, compared with 19 the previous day. All but one of yesterday’s cases were imported, suggesting that the country’s borders have been open, allowing infected travelers to enter the country and transmit the illness to locals. In Guangdong, one of the country’s hubs for export manufacturing, six locally spread cases were confirmed over the weekend.

A report published late last week by the China National Textile and Apparel Council showed a decline in production orders: Only 9% of manufacturers are said to be hitting 80% of their usual export capacity, and more than 61% agree that their export orders are less than half of their normal amounts.

“The situation of China’s export textile enterprises being notified by overseas households to cancel orders, postpone receipts and suspend production has increased significantly,” the council said. “The pressure of China’s epidemic prevention and control has also increased due to changes in the global situation. At present, commercial activities have not yet fully returned to normal, and domestic consumption has not yet rebounded.”

Textile and apparel imports to the United States from China plunged 31.7% to $2.47 billion in January. February’s numbers are expected to be released this week. Experts are forecasting even weaker demand in new orders at Chinese factories, as efforts to halt the spread of COVID-19 could lead to lower overall spending.

However, in an analysis released today, global information provider IHS Markit suggested that manufacturers’ output will increase simply because activity cannot be lower than the period during which factories were shuttered.

“The concern is, however, that by the time more production facilities come back online and [are] up to full capacity, demand for many products will have fallen sharply amid slumping global economic growth,” researchers added.

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