Globalisation is alive and kicking. That’s the message from trade’s big comeback in 2020
Geneva: The Covid-19 pandemic was supposed to put the final nail in the coffin of globalization and prompt a retreat into a new era of protectionism. Instead, some are now calling the crisis the Great Accelerator.
The drop in international commerce was quick and steep during the first coronavirus lockdowns, but a rebound fueled by emergency fiscal and monetary stimulus has been almost as sharp. Global trade is finishing the year on a strong upswing.
Following two years of the U.S.-China tariff war, trade carried out through sprawling networks of suppliers — the bogeyman of protectionism backers — are acting as lifelines to consumers and shock-absorbers for many businesses. Companies like Samsonite International SA to Walgreens Boots Alliance Inc. are reinforcing their sources of production abroad instead of retreating from global markets.
“What we have learned is supply chains are flexible and adaptable,” World Trade Organization Chief Economist Robert Koopman said in an interview. “Trade is part of the solution.”
Evidence of trade’s solid 2020 comeback is pouring in this week from several export bellwethers in Asia:
- South Korea said its exports returned to growth last month, led by gains in major markets such as the U.S. and the European Union.
- China’s Caixin Media PMI for manufacturing soared to a decade-high last month, and a separate official gauge of China’s manufacturing out Monday showed exports fueled faster-than-expected activity in November.
- A PMI reading on Japanese factories returned to its pre-pandemic level, while Taiwan rose to the highest since 2018.
Natalie Blyth, the global head of trade financing at HSBC Holdings Plc, isn’t seeing companies recoil supply chains to their domestic markets to protect against new risks. On the contrary.
She holds the view that the pandemic is acting as the “great accelerator” when it comes to trade, particularly with the aid of technology, as companies strengthen regional bases while eyeing a burgeoning middle class of some three billion consumers across Asia.
“I’ve tried to find it — I can’t find the reshoring. We can find reshaping,” Blyth said. “The super efficient, finely tuned just-in-time inventory model failed in phase one of Covid. But it’s not reshoring that’s the solution to that — it is diversification.”
