May 21, 2021|
JDT Chief Economist: Robust Exports Continue to Boost China’s Economy
by Vivian Yang
“China’s export growth will remain robust throughout the year, given stronger-than-expected stimulus in developed economies, the pandemic’s drag on global supply recovery, and China’s advantages in the global industrial chain,” wrote Dr. Jianguang Shen, chief economist of JD Technology, in an article published on May 20 in China Forex magazine.
With the overall improvement of the pandemic this year, China’s exports have expanded from pandemic prevention products to a growing number of products. The real estate market boom in the US increased demand for household products, fueling a rapid rise in Chinese exports of furniture and home appliances. Moreover, the exports of garments, shoes and boots, and baggage have also rebounded significantly, indicating that the demand for travel-related goods is gradually growing. In addition, goods less directly affected by the pandemic, such as cell phones, integrated circuits, automobiles and toys, have also seen strong growth so far in both US and European markets this year.
Dr. Shen pointed out that a widening supply-demand gap on the global level pushed up China’s exports. He listed three main reasons for the slow recovery of local productions, which include: 1) transnational supply chain has not yet recovered from the pandemic, as the Suez Canal blockage compounded worldwide container shortages and port congestion; 2) a lack of upstream and midstream supplies, notably the global shortage of chips that adversely affected automotive and electronics; and 3) the coexistence of a labor shortage and unemployment due to the lingering pandemic and generous unemployment subsidies.
On this week’s earnings call for the first quarter of 2021, JD Retail’s CEO Lei Xu also flagged to investors the impact of a global shortage of chips supplies. However, Xu believes that based on the company’s close collaboration with brands and suppliers on the deeper level of the supply chain, JD.com will be a less affected retailer.
As growth pressure eased with strong export performance, Dr. Shen suggested that China seize the opportunity to accelerate medium- and long-term reforms, especially exchange rate reform and capital account liberalization; encourage two-way capital flows; and promote the internationalization of the RMB.