Poland to gain USD 8 bln a year in production shift from China - report
Poland might benefit from a change in trade routes after the coronavirus pandemic, according to experts from the Polish Economic Institute (PIE) who believe the country might gain over USD 8 bln annually through production being moved from China.
A PIE report published on Wednesday entitled 'Trade routes after the COVID-19 pandemic' claims that the shift of some production away from China to other countries could result in China's GDP declining by 1.64 percent. Added value created in Poland could increase in that scenario by as much as USD 8.3 billion a year or by 1.87 percent in relative terms, expressed as an annual growth of added value created in Poland.
According to calculations by the World Trade Organisation, global trade in the wake of the coronavirus pandemic is set to shrink this year by 13-32 percent. "We can expect a fall in the volume of international trade, its regionalisation and a growth in protectionism as well as diversification of the supply chain," PIE analyst Jan Strzelecki of the foreign trade team said. "A natural step will also be increased pressure on supply security in strategic sectors of states' trade policy. China's importance in the global supply chain will also fall."
According to the calculations of PIE specialists, in the most optimistic conditions, European countries' national production could replace 10 percent of semi-products and end products from China and a further 10 percent of supplies from six new EU member states.
In 2019, Asia accounted for 35.3 percent of world exports and 33.8 percent of world imports. The greatest global exporters and importers remain the countries of Europe (with a share of 36.7 percent and 35.7 percent, respectively) however over half of that trade is intra-EU commerce.
Chinese co-production has a significant effect on global production. Materials coming from China account for 3.5 percent of materials used worldwide for production of industrial products. "The Chinese import charge had the greatest significance in the countries of Southeast Asia, East Asia and North America," the PIE report states.
In terms of sectors, the most dependent on supplies from China are global computer production, electronics and optical products, textile products and clothing. "The shift from China of parts of production of semi-products and finished products would mean a loss in added value to that economy that would stand at - depending on the variant - from USD 22.4 billion to USD 172 billion a year," explained Łukasz Ambroziak of PIE's foreign trade team.
In PIE's assessment, the most beneficial for EU member states would be a combination of national patriotism and strengthening of the new member states from Central Europe (the Czech Republic, Poland, Slovakia, Hungary, Romania and Bulgaria) in the role of the EU's factory. Apart from Poland (USD 8.3 billion) other countries of the region to benefit would be the Czech Republic (USD 4.9 billion), Hungary (USD 2.7 billion) and Romania (USD 2.6 billion).