On May 14, APEC Business Advisory Council (ABAC) held a video conference on ensuring the stability of global supply chains. As Chair of ABAC Sustainable Development Working Group, Mr. Frank Ning, Chairman of Sinochem Group, presided over the conference, and 85 representatives from 21 APEC economies discussed the impact of the COVID-19 pandemic on global supply chains and how to ensure the stability of global supply chains.
Chairman Frank Ning presented a proposal titled “Impact of the COVID-19 Pandemic on Global Supply Chains and Suggestions for International Cooperation” at the conference.
He pointed out in the proposal that China’s economy has entered a recovery phase, with effective fiscal and monetary policies in preventing and controlling the COVID-19 pandemic, bailing out affected enterprises in key industries, speeding up the resumption of work and production, etc. to ensure the stability of global supply chains with full efforts. China’s production and supply have gradually returned to normal, but the recovery of both market and demand will take some time and is expected to accelerate in the next six months. Due to the widening impact of COVID-19 pandemic, raw material procurement and labor mobility are hindered, global supply chains have been disrupted in some industries to certain extent, which may cause a shift of global supply chains to regional accumulation and localization. In the pharmaceutical, electronics and automotive industries, for instance, the manufacturing of terminal products has been affected due to the impact on the export of raw materials and core components. China’s port operations and import and export transportation have returned to normal and spring sowing has not been delayed, but if the COVID-19 pandemic continues in other parts of the world, its impact on the global economy will intensify. Since China is a hub of manufacturing and global supply chains, from the supply side, categories exported from China to major pandemic-stricken countries that represent over 20% of China’s total exports are affected; from the demand side, imports of high value-added precision components and equipment are affected by supply shortages or price increases. The supply chain, as part of the industrial chain, has been a driver to economic development over the past few decades. The normal functioning of supply chains had been affected due to trade frictions between the United States and China before the COVID-19 pandemic outbreak, and the impact has been further exacerbated, posing a greater challenge to global trade liberalization and globalization.
According to the proposal, the business community expected the economy to recover as soon as possible and global supply chains to remain stable. Hence, governments are called upon to firmly take effective measures to accelerate economic recovery and ensure the stability and smooth flow of global supply chains. Since over 50% of global manufacturing output comes from Asia, it is crucial for APEC member governments to commit that they would never take any measures that undermine global supply chains.
At the conference, representatives from Malaysia, Singapore, New Zealand, Australia, Canada, Japan, Thailand, Peru, Papua New Guinea and Tai Pei (China) shared their practical experience in coping with the pandemic and expressed their views on the topic.
Participants reached a consensus that the COVID-19 pandemic has impacted the normal operation of global supply chains and the business of enterprises around the world, especially SMEs, but it has promoted the development of digital technology and innovation models as well, triggering thinking and actions on building more reliable, smooth and flexible global supply chains. Since the COVID-19 pandemic is at different stages in different countries, APEC member economies should strengthen communications and share practical experience to avoid detours and reduce unnecessary losses. At the same time, APEC should continue to promote trade liberalization and globalization and take measures to facilitate smooth global supply chains, especially to ensure smooth trade of basic goods and upstream and downstream supply chains.
In response to COVID-19 pandemic and according to ABAC’s plan, the working groups will study and discuss on “Ensuring the Stability of Global Supply Chains”, “Promoting Open Markets for Products and Services”, “Supporting Small and Medium-sized Enterprises”, “Enhancing Digital Connectivity” and “Advancing Global Economic Recovery” and finally submit an ABAC policy proposal to the leaders of APEC economies.