CRS Says Coronavirus Affecting Exports From China

While auto parts, LCD panels and pharmaceuticals are most concentrated in the Chinese province where the coronavirus epidemic began, a recent Congressional Research Service report noted that quarantines are affecting port staffing, which can affect all shipments from China. “Business reopening has been uneven across sectors and locations in China. Many firms are awaiting government approvals to reopen and are facing difficulties in meeting new operating requirements, such as providing masks for employees,” the report said. Because passenger air traffic has been curtailed to and from China, there is much less space for air cargo shipments.

Even firms that diversified to other parts of Asia are not safe from the effects, the authors said. “Manufacturing that recently shifted offshore to other parts of Asia still often depends on intermediate inputs from China and thus is not insulated from China’s production slowdown.”

The economic slowdown that has resulted from the epidemic -- its full scope is unclear, depending on how long the quarantines last -- could prevent China from making its promised purchases under the phase one trade deal with the U.S. “Transportation constraints and a slowdown in demand could affect China’s import levels,” the report said, adding: “The agreement has a force majeure provision that could give China flexibility in implementing its commitments.“