EsBusiness activity regarding international trade collapsed in China in February, Panjiva’s analysis of CFLP survey data for Chinese large-scale businesses shows. The PMI survey export orders dropped to 28.7 (where 50 or below indicates a contraction) from 48.7 a month earlier while imports fell to 31.9 from 49.0. Neither should be a surprise given the outbreak of COVID-19 and risk for supply chains discussed in Panjiva’s research Feb. 26.
Both represented record lows. The previous low for the export measure during the great financial crisis of 2008 was Nov. 2008 of 29.0 while imports reached a low of 32.2. Importantly both had already been in contractionary territory with the import figure below 50 since July 2018 while exports had been in contraction since June 2018 with the exception of December 2019.
Source: Panjiva
Negative sentiment regarding the downturn in China’s economy can also be seen in Europe with Germany’s IFO back in negative territory with a reading of -0.7 compared to +0.8 a monthly earlier. Similarly, France’s INSEE survey for export sentiment was -11 from -8.
Source: Panjiva
With the COVID-19 outbreak spreading, there’s likely to be widespread disruptions to corporate supply chains. In terms of European trade with China, Panjiva’s analysis of official data shows the largest export from the EU to China was cars with 18.6 billion euros ($20.6 billion) of exports in 2019, representing 9.4% of all exports.
Aerospace represented 5.5% of exports while electrical circuits accounted for 7.75 billion of exports. The latter surged by 80.5% year over year in Q4 and will likely reverse given China’s factory closures.
In terms of healthcare there were 8.04 billion euros of pharmaceuticals following a 23.8% increase in Q4 while shipments of medical diagnostic equipment worth 2.48 billion euros climbed by 17.0%. Both may increase given China’s healthcare needs, though it remains to be seen whether local demand will overcome export requirements.
Source: Panjiva
