Regulatory intelligence for US exporters

USCBC Members in 'Crisis Mode', China Pushing for Normalized Trade as Coronavirus Outbreak Continues

U.S.-China Business Council members are in “crisis mode” as China continues to battle the coronavirus outbreak, which has caused disruptions in supply chains and hurt earnings, a USCBC spokesman said. While it is too early to predict how much of a sustained impact the virus will have on global trade, the USCBC is confident trade and business with China will normalize. “Everyone I’ve spoken with fully expects life to return to normal,” USCBC spokesman Doug Barry said in an email, “but for now are taking one day at a time.”

Aside from manufacturing and business disruption, U.S. companies in China are facing “many challenges” with logistics and basic communication, Barry said. Orders for back-to-school supplies and “even Christmas” are being placed now, which “require this much lead time to be manufactured and shipped to market,” Barry said. “This has a cascading effect throughout the world.”

Although business recovery from China’s SARS virus outbreak in the early 2000s was “reasonably fast,” Barry said, China’s larger economy and the fact that so little is known about the coronavirus makes it difficult to make predictions about how quickly trade will recover from the latest viral epidemic. “We don’t know yet whether the coronavirus will resemble other viruses in duration and lethality,” Barry said. “[But] no one wants more to get back to normal -- and is more capable of getting there -- than the Chinese people we know.”

Foreign countries and companies should continue normal trade operations with China as the country tries to control the virus, a spokesperson for China’s Commerce Ministry said during a Feb. 10 press conference. China intends to increase support for foreign companies and manufacturers to spur production and trade, the spokesperson said. “We are paying close attention to the possible impact of the epidemic on foreign trade,” the spokesperson said, according to an unofficial translation of the transcript. “I want to emphasize that there is no reason to intervene in international trade.”

China is “actively helping foreign-funded enterprises to cope with the challenges of the epidemic” and will “increase” support to those companies, the spokesperson said. The support includes “policies” issued by local governments to streamline customs procedures and trade, which includes an effort to increase imports of medical supplies and technology to control the coronavirus (see 2002030034). “China is going all out to deal with the epidemic situation,” the ministry spokesperson said. “We have the confidence, ability, and confidence to win the fight against the epidemic.”

The spokesperson dismissed a suggestion that the virus has hurt China’s position in the global supply chain as companies temporarily close their Chinese branches, saying its “competitive advantage ... has not changed.” The spokesperson said “it is not recommended to restrict transfers, trade and flows. It is hoped that countries will fully show solidarity and cooperation and work together to overcome this epidemic and create convenient conditions for the normal development of international trade.”

China’s technology supply chain remains at a “near standstill” due to the virus, according to a Feb. 10 report from Nikkei Asian Review. Suppliers, including suppliers of Apple, are “straining to restart production” even as China recently approved some production sites to restart activities, the report said. Health issues have been found in some facilities, including the world’s biggest iPhone production site in Zhengzhou operated by Foxconn Technology Group, a leading electronics industry company, the report said.

In addition, China’s smartphones sales may decrease by half in the first quarter due to the virus outbreak, which will likely hurt Huawei, Reuters said in a Feb. 10 report. The virus will likely “dampen 5G shipments,” the report said, citing a research firm.