Chinese President Xi Jinping has expressed his strong commitment to increasing overseas investment in manufacturing, despite losing export market share due to Zero-Covid policies
Since it joined the World Trade Organisation in 2001, China has seen its manufacturing industry make huge inroads right across the globe with the country overtaking the USA as the world’s largest producer of manufactured goods by 2011.
Despite this global domination, the impact of COVID-19 has caused devastating ramifications for the manufacturing industry and supply chain.
Seeking to overturn this situation, China’s President Xi Jinping told the Communist Party Congress this week that he would encourage foreign investment in manufacturing, to rebuild China as the ‘factory of the world’.
Factory of the world?
The zero-COVID-19 policy imposed by the Chinese government has resulted in many manufacturing businesses ceasing operations and as a result, exports have slumped. However, Beijing is determined to bounce back, planning to entice foreign businesses back to invest in China’s technology.
According to data from MDS Transmodal, China’s Zero-COVID-19 strategy has cost the country its manufacturing prowess and export market share and, in a further blow to the country's pride, it is other Asian countries who have taken its spot.
Antonella Teodoro, MDS Transmodal’s Senior Consultant, explained the current situation, saying “China’s Zero-COVID-19 approach is impacting production and manufacturers are seeking alternatives to the current ‘factory of the world. Drilling down to the individual commodity groups exported from China, we observe that China has been continuing to lose market share, with Vietnam amongst the countries gaining importance on the international landscape.”
As a further note of gloom, Chinese workers could see a continued manufacturing devolution if the country invades Taiwan, similar to the situation in Russia where hundreds of businesses swiftly closed operations in Russia or halted deals after Russia’s invasion of Ukraine.
President Xi Jinping recently declared that he would “never promise to renounce the use of force” in his hawkish ambition to reunify China with the Westernised ‘breakaway province’. If the two countries do engage in physical conflict, then the result will surely be that businesses will leave China, possibly for good with business leaders such as JPMorgan Chase, Bank of America and Citigroup having already vowed to pull out of China if an invasion takes place.
