Due to the previous occurrence of the US-China trade war, companies had started moving their supply chains out of China.
These companies shifted their production and distribution networks to countries like India and Vietnam.
However, the current surge of the coronavirus pandemic cases in these two countries may lead to supply channels U- turning back to China.
Therefore, according to Chief economist at Pinpoint Asset Management, Zhang Zhiwei, China may start to see a change in its fortune since the event of the US-China trade war.
According to CNBC’s “Street Signs Asia”, on Monday, Zhang Zhiwei told them, “Before the pandemic, we saw factories moving out of China – Samsung, Foxconn these big-name companies – setting up factories in Vietnam, India.”
Zhang also stated that Foxconn, which is major supplier for Apple, was forced to shut down their facilities in Vietnam and India because of their surge in COVID-19 cases.
India’s cases are continuously on the rise and show barely any signs of improvement, while the northern province of Bac Giang in Vietnam, ordered for four industrial parks to temporarily close down on Tuesday.
While China could benefit from the situation of these two countries brought about by the COVID-19 outbursts, how far and how long their gain will last is unclear.
While talking about the current growth of export in China being between 20% to 40%, Zhang said, “ But if supply chain in India and Vietnam is disrupted for a long time, we could see this kind of 20%, 30% export growth (in China) to continue into next year.”