China exporters look inward as virus hits overseas markets

Beijing – Cancelled shipments, returned goods and a dearth of new orders have left China exporters in crisis as the coronavirus hits its trading partners worldwide – accelerating a long-standing push towards domestic consumption.

The world’s second-largest economy is stirring back to life after virus cases dwindled from a peak in February, when activity came to a near-halt.

But recovery is now hampered by lockdowns and restrictions overseas as the coronavirus continues its deadly march across the planet, with exporters forced to look to domestic markets after years of selling overseas.

Chinese online marketplace Taobao said the number of foreign trading companies opening stores on its domestic-focused platform spiked 160 percent from February to May.

And policymakers – who have sought for years to wean the country off cheap exports and government spending in favor of domestic consumption – are welcoming the change.

“When there is no light in the west, there is light in the east,” the commerce minister, Zhong Shan, told reporters at a briefing this week.

He said domestic sales from export businesses rose 17 percent in April, and the government was supporting trading enterprises that specialized in foreign sales to tap the home market instead.

Foreign sales used to make up nearly half of toymaker Shantou Beilisi’s turnover, but this plummeted to just five percent after the virus struck.

General manager Chen Zhuoyue told AFP that orders from his largest export markets, the United States and Europe, are now “basically negligible.”

“Many countries there imposed lockdowns and the global flow of logistics is another issue... these have affected our order volume,” he said.

“There is also a rising number of unemployed overseas, and their purchasing power has fallen.”

Faced with few new orders and cancellations of existing ones, Chen said the company is attempting more domestic sales by changing the packaging of products and working with platforms such as JD.com to sell online.

Still, gearing towards the China market may not yield immediate results as weak domestic demand was a key factor behind the country’s poorest economic growth in around 30 years in 2019.

The push inwards comes from China’s top echelons, with Industry and Information Technology Minister Miao Wei saying Wednesday that China aims to “rapidly activate domestic demand” to make up for the external shortfall.