Screenshot of the report by The Economist

Despite all the dislocations from the coronavirus crisis, China’s manufacturing is still going strong, said The Economist on June 23.

In a report entitled “China is the world’s factory, more than ever”, the author pointed out that Chinese firms are in better shape than most elsewhere amid the coronavirus outbreak, attributing it to China’s “success in slowing the spread of the coronavirus”.

The article said the Canton Fair, though conducted entirely online this year, is a testament to China’s manufacturing muscle. “Some 25,000 exhibitors have hosted live-streams simultaneously, often from their factories, chatting to anyone interested in their products.”

China is home to 28% of the world’s manufacturing—nearly as much as America, Japan and Germany combined—and its manufacturing is still going strong despite all the dislocations from the coronavirus crisis, the report said.

According to the article, China has two big advantages as a manufacturing power. The first advantage is China’s unparalleled industrial base in breadth and depth, “churning out everything from low-end footwear to high-end biotech”.

“Even as wages have steadily increased, China’s combination of manufacturing clusters, first-class infrastructure and upgraded factories have made it more competitive,” the report said.

According to the OECD, in 2005, 26.3% of the value of China’s exports was added abroad; by 2016 that was down to 16.6%, with the share of foreign content falling most sharply in electronics, meaning that “more of the bits and bobs that end up in Chinese gadgets are themselves made in China”.

Citing an example of face masks as a vivid illustration of China’s strengths, the article noted that at the start of February, China made about half the world’s supply, 10m a day. Within a month, output had increased to nearly 120m. “That was not simply through exertion. It was thanks to having ‘the world’s most complete supply chain’,” the report said.

The second advantage for China, it said, is its own vast market. Despite the trade war, global firms look even more wedded to China. According to Rhodium Group, a research firm, during the past 18 months the value of foreign mergers and acquisitions in China reached its highest in a decade.

Even amid the coronavirus outbreak, not only is China’s economy one of the few likely to grow this year; its earlier resumption of industrial activity has allowed exporters to gain market share while most other countries are still in varying states of lockdown, the article noted.