A majority of UK firms importing from China are keeping faith with the country despite the COVID-19 virus, delegates at an Institute of Export & International Trade webinar heard yesterday.

At the webinar on ‘Covid-19: What have we learnt so far’, delegates from firms sourcing from China were asked if they were looking to source more locally as a result of the pandemic, two thirds (66%) said they were not, while 34% said yes.

The webinar, hosted by the IOE&IT’s Open to Export service, had nearly 300 attendees and featured speakers from the China-Britain Business Council and global payments company CambridgeFX.

Local Chinese focus

The Chinese government is currently focusing its help for business at a local level, said Torsten Weller, China policy analyst at CBBC. “What we haven’t seen so far are specific programmes for export-oriented producing – policies instead have focused on internal production and infrastructure.

“One of the most comprehensive policies – the Shanghai government’s 28 measures – involves a massive reduction of fixed costs, and strong incentives for businesses to keep people on the payroll, such as exemption from tax and social security payments,” he said.

For consumers, nationwide vouchers are being distributed to spend on goods and kick-start domestic consumption.

The CBBC’s comments came in the same week that the International Monetary Fund (IMF) urged Asian governments to use “all the policy instruments in their toolkit” to stimulate their economies.

Zero growth in Asia

The IMF reported that economies in Asia will see zero growth this year, though prospects for 2021 were positive.

“The impact of the coronavirus on the region will be severe, across the board and unprecedented,” said Changyong Rhee, the IMF’s Asia director at a briefing yesterday.

“Unlike during the global financial crisis, Asia’s real sector, especially the service sector, is being hit hard by containment measures of the coronavirus pandemic.”

‘Extraordinary action needed’

Headline statistics from the IMF this week included:

• The global economy is expected to contract in 2020 by 3% - the worst recession since the Great Depression.
  
• Prospects for Asia in 2021, while highly uncertain, are for strong growth.

“If containment measures work, and with substantial policy stimulus to reduce ‘scarring,’ growth in Asia is expected to rebound strongly - more so than during the global financial crisis of 2009,” the IMF said.

• China’s growth is projected to decline from 6.1% in 2019 to 1.2% 2020.

This decline is in sharp contrast with China’s growth performance during the 2008-2009 financial crisis, when fiscal stimulus of about 8% of GDP by the Chinese government ensured growth was little changed at 9.4% in 2009.

“We cannot expect that magnitude of stimulus this time, and China won’t help Asia’s growth as it did in 2009,” the IMF said this week.