1、 UNCTAD/DITC/INF/2020/1 *This document has not been formally edited OVERVIEW “It is unavoidable that the novel coronavirus epidemic will have a considerable impact on the economy and society” - Chinas president Xi Jinping, televised address, February 23, 2020. “The spread of the new coronavirus is a

2、 public health crisis that could pose a serious risk to the macro economy through the halt in production activities, interruptions of peoples movement and cut-off of supply chains” - Japanese Finance Minister Taro Aso. G20 gathering in Riyadh, Saudi Arabia, February 24, 2020. “Honda Motor Co. will r

3、educe vehicle output at two of its domestic plants in Saitama Prefecture for a week or so in March due to concerns about parts supply from China where a new coronavirus outbreak continues to disrupt economic activities” - Honda spokesperson, March 3, 2020. Besides its worrying effects on human life,

4、 the novel strain of coronavirus (COVID-19) has the potential to significantly slowdown not only the Chinese economy but also the global economy. China has become the central manufacturing hub of many global business operations. Any disruption of Chinas output is expected to have repercussions elsew

5、here through regional and global value chains. Indeed, most recent data from China indicate a substantial decline in output. China Manufacturing Purchasing Managers Index (PMI), a critical production index, fell by about 22 points in February (Figure 1a). This index is highly correlated with exports

6、 and such a decline implies a reduction in exports of about 2 percent on an annualized basis. In other words, the drop observed in February spread over the year is equivalent to -2 percent of the supply of intermediate goods. Indicators on shipping also suggest a reduction in Chinese exports for the

7、 month of February (Figure 1b). Container vessel departures from Shanghai were substantially lower in the first half of February with an increase in the second half. However, the Shanghai Containerized Freight Index continues its decline thus indicating excess shipping capacity and lower demand for

8、container vessels. UNCTAD/DITC/INF/2020/1 *This document has not been formally edited Source: National Bureau of Statistics of China Source: MarineTraffic global ship tracking intelligence provider and Shanghai Shipping Exchange. ANALYSIS METHODOLOGY The methods used in this note are meant to identi

9、fy the economic sectors and countries that are most exposed to a disruption of Chinas exports of intermediate inputs. The analysis is 25 30 35 40 45 50 55 Figure 1a: Chinas Puchasing Managers Indices Manufacturing PMI Production IndexManufacturing PMI New Export Orders -22 Points MoM 0 200 400 600 8

10、00 1000 1200 0 50 100 150 200 250 300 350 SCFI Index Number of Vessels Figure 1b - Shanghai: Containers Shipping Indicators Containers Vessels - Shanghai Weekly Departures (Left Axis) Shanghai Containerized Freight Index (Right Axis) UNCTAD/DITC/INF/2020/1 *This document has not been formally edited

11、 based on United Nations Statistics Division trade data covering about 200 countries and 13 manufacturing sectors. In summary, each countrys and industrys integration with the Chinese economy is measured by the Grubel-Lloyd Index (GLI) of intra-industry trade. The GLI is calculated on products categ

12、orized as manufacturing intermediate inputs (e.g. parts and components), computed at the industry level (as defined by the 4 digit Harmonized System classification) and then aggregated at the sectoral level using bilateral trade shares. The GLI is then used as a proxy measuring the percentage of a g

13、iven countrys exports in each industry that is vulnerable to supply disruption in China. Notably, the analysis assumes that supply disruptions are limited to China. Disruptions that COVID-19 may directly cause in the output of other countries are not considered at this stage. The results of the anal

14、ysis are to be interpreted as short-term effects as they assume the supply capacity in the rest of the world to remain constant. This note does not consider commodities and minerals (e.g. rare earths) but focuses only on manufacturing output. Finally, this note does not examine the impact of reduced

15、 remand due to any economic slowdown in China (e.g. impact on third country of the reduced Chinese imports of commodities). IMPACT ON GLOBAL VALUE CHAINS During the last two decades China has become crucial to the global economy. Chinas rising importance in the global economy is not only related to

16、its status as a manufacturer and exporter of consumer products. China has become the main supplier of intermediate inputs for manufacturing companies abroad. As of today, about 20 percent of global trade in manufacturing intermediate products originates in China (up from 4 percent in 2002). Figure 2

17、 shows Chinas current integration in global value chains across sectors as measured by the GLI. Chinese manufacturing is essential to many global value chains, especially those related to precision instruments, machinery, automotive and communication equipment. Any significant disruption in Chinas s

18、upply in these sectors is deemed to substantially affect producers in the rest of the world. Indeed, many companies around the world are fearful that the measures put in place to contain COVID-19 (i.e. restrictions to economic activities and movement of people), could hinder the supply of critical p

19、arts from Chinese producers, therefore affecting their own output. UNCTAD/DITC/INF/2020/1 *This document has not been formally edited IMPACTED COUNTRIES A reduction in Chinese supply of intermediate inputs can affect the productive capacity and therefore the exports of any given country depending on

20、 how reliant its industries are on Chinese suppliers. For example, some European auto manufacturers may face the shortage of critical components for their operations, companies in Japan may find difficult to obtain parts necessary for the assembly of digital cameras, and so on. For many companies, t

21、he limited use of inventories brought by a lean and just-in-time manufacturing process would result in shortages that will impact their production capabilities and overall exports. Table 1 reports by sector the potential effect of COVID-19 on exports in the most exposed countries to Chinese supply d

22、isruptions. Overall, the most impacted economies will be the European Union (machinery, automotive, and chemicals), the United States (machinery, automotive, and precision instruments), Japan (machinery and automotive), the Republic of Korea (machinery and communication equipment), Taiwan Province o

23、f China (communication equipment and office machinery) and Viet Nam (communication equipment). KEY POINTS While there is still uncertainty about the impact of the COVID-19 on Chinas productive capacity, the most recent statistics point to a significant downturn. The full effect of COVID- 19 on globa

24、l value chains will become clearer in the coming months. However, one question 0.00.10.20.30.40.50.60.7 Wood Products/Furniture Textiles and Apparel Petro/Chemicals Paper Products/Publishing Metals and Metal Products Leather Products Office Machinery Rubber/Plastics Electrical Machinery Comunication

25、 Equipment Automotive Machinery Various Precision Instruments Grubel-Llyod Index Figure 2 - China Integration in Global Value Chains, by sector UNCTAD/DITC/INF/2020/1 *This document has not been formally edited of importance is how a disruption in Chinese supply of intermediate inputs will affect th

26、e rest of the world. Based on the analysis of this note, two key points can be made. First, even if the outbreak of COVID-19 is contained mostly within China the fact that Chinese suppliers are critical for many companies around the world implies that any disruption in China will be also felt outsid

27、e Chinas borders. European, American and East Asian regional value chains will be disrupted. The estimated global effects are subject to change depending on the containment of the virus and or changes in the sources of supply. Second, it is expected that the spillover effects of a disruption in Chin

28、ese supply will be diverse across economic sectors and dependent on the geographic localization of the COVID- 19 outbreak and of the containment measures within China. For example, automotive industrys intermediate exports may fall relatively more as the industry is geographically localized in the r

29、egion where the outbreak of COVID-19 occurred. Importantly, because of lack of information this note does not consider this second aspect. Once sectoral data on Chinese output is available the likely effect on the various global value chains will become clearer. UNCTAD/DITC/INF/2020/1 *This document

30、 has not been formally edited Table 1: Global effects of Chinas slowdown through global value chains, 20 most affected economies (US$ million from a 2 percent reduction of China exports in intermediate inputs) Country Automotive Comunication Equipment Electrical Machinery Leather Products Machinery

31、Various Metals and Metal Products Office Machinery Paper Products and Publishing Chemicals Precision Instruments Rubber and Plastics Textiles and Apparel Wood Products and Furniture TOTAL Australia911261 Bangladesh00016 Belarus0212 Brazil420207 Cambodia002

32、700000000010 Canada48838686201136660 Costa Rica0220000001010015 European Union254349835715.597 Hong Kong, SAR23744610730332 India34029 Indonesia40362466783312 Israel2470273189 Japan974395558

33、48352367161342445.187 Korea, Republic of5786873360253.816 Malaysia32268786955563311.077 Mexico4937821657262521.369 Morocco25026 New Zealand1211 Norway20380222500271010100 Pakistan0000000000043044 Philippines220717101300 Rus

34、sian Federation8213149 Saudi Arabia00000 Singapore96301132.165 South Africa9000370116102039 Switzerland424928322615121301.087 Taiwan Province of China47271101102972.645 Thailand95168733 Tunisia52270 Turkey34 Ukraine3116 United Arab Emirates0016 United Kingdom669684552996466321201.917 United States8453998899977895.779 Viet Nam2988075961102071002.296