The drop in commercial trade of China is estimated to repeat in the second quarter due to the decrease in global demands due to restriction measures aiming to prevent COVID-19 from spreading.
It was expected that both export and import of China would fall by more than 10% in March, continuing the chain of decrease in the first two months of the year. The global commercial prospects are not too optimistic either.
According to the Global Commercial Organization, the year 2020 might have the worst global commercial drop since the Great Depression 1930. In 2019, Chinese cargos suffered from the impacts of its trade conflict with the US, as well as the reduction in the speed of global growth.
The following epidemic made Chinese indexes drop to the lowest level since 2012 with a decrease in export of 17.2% in the first two months of 2020 compared to the same period in 2019.
Meanwhile, major trade partners of China, such as the US, might have to face multiple delaying months due to social quarantine regulations. This makes the demands for Chinese goods and materials fall severely, and consumption and production in the US and Europe take months to recover.
Betty Wang, a senior economic expert at Australia & New Zealand Banking Group in Hong Kong, commented: “If major export markets of China, including the European and American ones, continue to be quarantined in the second quarter of the year, it is almost certain that China will face difficulties in the following 3 months.
It will not be a surprise if Chinese export in the second quarter drop by a 2-digit number, despite the damage compensation made by the medical commodity export of this country”.
Many other economic experts have also shared an idea similar to that of Wang. Ning Zhang, an economic expert of UBS, says that China export is expected to drop by 20% by June due to the upcoming depressions in the US, Europe, Japan, and other newly-developed economies. Larry Hu of Macquarie Group Ltd.
Also says that China’s export will decrease in the second quarter and the drop will be 13% for the whole year. In an optimistic scenario published last week by WTO, the global trade will plummet by 13% in 2020, while the latest drop was in 2009 with a value of 12%.
This is the year when the world suffers from the worst impacts of a financial crisis. Meanwhile, the pessimistic scenario of WTO shows that the global commodity quantity will fall by 32% this year. If this comes true, Chinese commerce might decline by 13%, according to Larry Hu.
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