Page 344 - 2021 White Paper
P. 344
1 White Paper on the Business Environment in China
2.6 Resources and Industrial Materials
Key Take-Aways the 172 companies that took part in the American
Chamber of Commerce in South China survey say
• China stepped up shale gas development they no longer face supply chain disruptions.
last year, as the country looks to fall back on
unconventional output to drive natural gas • The most vulnerable companies were those
production growth. which rely heavily or solely on factories in China
for parts and materials. The activity of Chinese
• Plummeting global growth, primarily in manufacturing plants remained depressed for
China, and the escalating US-China trade war have months.
hurt industrial activity and goods trade in both
countries. Although the imposition of blanket • China's stranglehold on rare earth metals
tariffs on imports of base metals, alloys and and their supply chains has been highlighted by the
related products by the US caused prices to rise disruption wrought by the coronavirus pandemic,
in US markets, this was not replicated elsewhere, prompting governments and buyers to look for
including in Europe, where most of the price series alternative sources.
is based.
Background
• Iron ore prices soared to multi-year highs
mid 2020 as Chinese government stimulus spurred Many analyses originally compare the COVID-19
infrastructure building, boosting prices of the epidemic with the SARS epidemic in 2002. This
commodity even amid a global pandemic. was a mistake since SARS only created just a blip
in the global financial markets. China’s value in
• Rising tensions with China and the race the worldwide economic ecosystem has increased
to repatriate supply chains in the wake of the tremendously in the past 18 years. The country has
COVID-19 pandemic have given fresh impetus to more than doubled its share of trade with the rest
US efforts to launch a renaissance in rare earths, of the world in the last 20 years, and many more
the critical minerals at the heart of high technology, industries are now heavily dependent on China. The
clean energy, and especially high-end US defense SARS epidemic started in the Guangdong province
platforms, but it’s not going well. in 2002 and led to 8,000 cases in 2003. During 2002,
the GDP of China represented 4.31% of the world
Covid-19 Repercussions GDP. By contrast, the number of detected cases
of Covid-19 has already passed 80,000 and China
• The peak impact of Covid-19 on global supply represents about 16% of the world GDP, an almost
chains occurred in mid-March, forcing thousands four-fold increase. As a result of events such as
of companies to throttle down or temporarily shut the 2002-2003 SARS epidemic, the March 2010
assembly and manufacturing plants in the US and Iceland’s volcano eruption, Japan’s earthquake and
Europe. According to a survey conducted by the tsunami in March 2011, and the flood in Thailand in
American Chamber of Commerce in South China, August 2011, companies increased the amount of
in March, when China was still grappling with the inventory they keep on hand. But they still usually
Covid-19 outbreak, 100% of companies said that carry only 15 to 30 days’ worth of inventory. It is
they had experienced problems in their supply possible that the Chinese New Year week-long
chains. By 2020 September, more than 78% of vacation motivated some companies to increase
344
2.6 Resources and Industrial Materials
Key Take-Aways the 172 companies that took part in the American
Chamber of Commerce in South China survey say
• China stepped up shale gas development they no longer face supply chain disruptions.
last year, as the country looks to fall back on
unconventional output to drive natural gas • The most vulnerable companies were those
production growth. which rely heavily or solely on factories in China
for parts and materials. The activity of Chinese
• Plummeting global growth, primarily in manufacturing plants remained depressed for
China, and the escalating US-China trade war have months.
hurt industrial activity and goods trade in both
countries. Although the imposition of blanket • China's stranglehold on rare earth metals
tariffs on imports of base metals, alloys and and their supply chains has been highlighted by the
related products by the US caused prices to rise disruption wrought by the coronavirus pandemic,
in US markets, this was not replicated elsewhere, prompting governments and buyers to look for
including in Europe, where most of the price series alternative sources.
is based.
Background
• Iron ore prices soared to multi-year highs
mid 2020 as Chinese government stimulus spurred Many analyses originally compare the COVID-19
infrastructure building, boosting prices of the epidemic with the SARS epidemic in 2002. This
commodity even amid a global pandemic. was a mistake since SARS only created just a blip
in the global financial markets. China’s value in
• Rising tensions with China and the race the worldwide economic ecosystem has increased
to repatriate supply chains in the wake of the tremendously in the past 18 years. The country has
COVID-19 pandemic have given fresh impetus to more than doubled its share of trade with the rest
US efforts to launch a renaissance in rare earths, of the world in the last 20 years, and many more
the critical minerals at the heart of high technology, industries are now heavily dependent on China. The
clean energy, and especially high-end US defense SARS epidemic started in the Guangdong province
platforms, but it’s not going well. in 2002 and led to 8,000 cases in 2003. During 2002,
the GDP of China represented 4.31% of the world
Covid-19 Repercussions GDP. By contrast, the number of detected cases
of Covid-19 has already passed 80,000 and China
• The peak impact of Covid-19 on global supply represents about 16% of the world GDP, an almost
chains occurred in mid-March, forcing thousands four-fold increase. As a result of events such as
of companies to throttle down or temporarily shut the 2002-2003 SARS epidemic, the March 2010
assembly and manufacturing plants in the US and Iceland’s volcano eruption, Japan’s earthquake and
Europe. According to a survey conducted by the tsunami in March 2011, and the flood in Thailand in
American Chamber of Commerce in South China, August 2011, companies increased the amount of
in March, when China was still grappling with the inventory they keep on hand. But they still usually
Covid-19 outbreak, 100% of companies said that carry only 15 to 30 days’ worth of inventory. It is
they had experienced problems in their supply possible that the Chinese New Year week-long
chains. By 2020 September, more than 78% of vacation motivated some companies to increase
344
