How China is setting new rules for Globalisation.
If 2020-2021 had a colour, it would be grey. When Covid-19 escorted China (along with other major economies) to a halt for several weeks last year, a separate form of globalisation was witnessed by the foreign firms. A form without a prosperous Chinese economy at its core. Panic mushroomed all over the globe. Foreign companies accepted that they have become extremely dependent on China as the simplest and best destination to manufacture and sell their products. Whether for exports or domestic consumption, China served as the ideal place.
The novel coronavirus set foot in the midst of an ongoing trade war between America and China. The virus was seen as a necessary shock that would bring about major changes. Foreign companies vowed to diversify their supply chains to make them more flexible, at the same time stating that they would not change their production locations “in China, for China” to satisfy Chinese demand once it returned.
A year has passed, the situation has taken several dramatic turns. On June 8th a report was released by the European Union Chamber of Commerce. The report was the result of the annual business confidence poll, which was conducted by the same body and was participated by nearly 600 businesses. The report focused upon the growth of optimism in China, surprisingly the economic growth of China has resumed much faster than anticipated by experts. In 2020, three-quarters of European companies dreamt they would be making profits in China, allowing them to transfer the excess profits back to the headquarters in the course of poor results abroad.
Optimism is not the same for all industries. The automobile and luxury goods manufacturers, to be precise, experienced record sales. The rich Chinese class who were unable to travel due to the pandemic restrictions went shopping instead, which served as the reason for such record sales. The majority of the companies (91 per cent) stated that they would keep their investments in China, moving them elsewhere was definitely not an option. More than a quarter of companies are planning to transfer their supply chain networks completely within China. This number is huge, almost five times the number of companies shifting their supply chains from China to overseas.
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