April rained down a torrent of death and economic ruin on countries around the world. Meanwhile, China profited mightily by selling relief supplies and equipment to treat the virus that they unleashed on the planet.
China’s General Administration of Customs released data on Thursday, showing that exports exceeded $200 billion in April, for year-over-year growth of 3.5%. Economists polled by Reuters expected a contraction of 15.7%. At the same time, Chinese imports fell 14.2% in April, as they bought less from trading partners around the world. Analysts expected a year-over-year decline of about 11%. China’s April trade surplus of over $45 billion was the largest since December, the month before the US-China phase one trade deal was signed.
Among the biggest growth sectors leading the export boom last month were medicine, medical devices and textiles – those used to make masks and other personal protective equipment (PPE). Exports increased by 33% to Japan, by 32% to Australia, 8% to South Korea and by just 2% to the United States.
Medical sales alone would not be enough to drive this type of growth, and Chinese factories did begin reopening in March and April, as virus spread reportedly began to ease across the country. But there’s a bitter dose of irony in the fact that China is reaping financial benefit from selling supplies to treat the worldwide pandemic that began on their turf. With reduced manufacturing in many sectors around the world, China can further cement their role as the world’s factory, ensuring a prolonged trade imbalance.
I’m not suggesting the Chinese purposely infected the rest of the world. I don’t believe they did. I do believe they locked down the information flow – both in the early days of the contagion and in the reporting of cases and deaths since January. There is ongoing debate about how the virus first spread – whether from an infected animal in a “wet market” or an infectious disease lab in Wuhan. Regardless, had China practiced the same transparency as has the U.S. and most of the world with regard to the volume of cases and the highly contagious nature of the disease, we might have been better equipped to slow it’s spread.
In fact, the Department of Homeland Security determined that “before sharing full details on the novel coronavirus outbreak with the World Health Organization, Beijing dramatically increased its imports and decreased its exports of medical supplies,” according to Politico.
So not only did China hide the severity of the outbreak, they bought up as much protective gear as possible before letting on to the rest of the world that this disease was anything more serious than a cold. Then, when their infection rate began moving in the opposite direction of the rest of the world, they turned around and sold their surplus gear to desperate governments, at a significant profit.
While the rest of the world debates about how and when to reopen, and while millions of people remain out of work and dependent on a government hand-out, China is taking financial advantage. The irony runs deep – not just providing first the problem, then the partial solution – but the timing of it all. After decades of taking the U.S. to the woodshed in a lopsided trade relationship, China was finally called on the carpet and forced by a tariff-wielding President Trump to balance the scales. Within days, the landscape changed to something nobody expected. Now the trade bluster that dominated headlines for months seems like a lifetime ago as we work to rebuild our economy. As we do, we would be wise to build it in such a way that it can stand alone if it must.