China's Response to the Anti-Globalization Trend
As the novel coronavirus spreads around the world，opponents of globalization are making fresh inroads in policy making and public opinion. Measured by the proportion of world exports to global GDP，the year 2008 saw the peak of globalization，with the ratio reaching 25%. From then on，the proportion has been volatile，slipping back to 23% by 2018. Since the second half of 2018，trade tensions between China and the United States have flared. The US imposed 25% tariffs on US$50 billion and then on US$200 billion worth of imported Chinese goods，alongside a 15% tariff on goods worth about $120 billion. China has introduced countermeasures.
Under the effects of these tit-for-tat measures，total global exports fell 3% in 2019，and the anti-globalization trend grew stronger. In 2020，the novel coronavirus pandemic pushed 44 countries to shut their borders. According to an International Monetary Fund forecast，170 countries will see negative economic growth this year. Concerns over the anti-globalization trend have been mounting as the world economy heads into recession and foreign trade cooperation has faltered.
As the first country to experience the coronavirus outbreak – a country that accounts for nearly 10% of total global trade and bears the brunt of higher US tariffs — China has been a focus of attention as to how it will respond to the anti-globalization trend. This paper analyzes China's foreign trade situation and makes suggestions on a possible course of action.
Impact on China's Economy
The global supply chain has been hit by the spread of the novel coronavirus and the fallout from Sino-US trade friction. World trade has slowed as a result of the extensive economic shutdown resulting from Covid-19，the decline in total world demand and disruptions to the global supply chain. Global trade is expected to suffer more than in 2009 after the financial crisis. The decline in trade that year was caused mainly by reduced demand from developed countries，though the capacity of suppliers was left largely intact. However，this time multiple points in the supply chain have been hammered，and this has produced a more profound impact on world trade. According to the latest forecast of the World Trade Organization，international trade will actually fall between 13% and 32% in 2020. As for China，the extent of the drop in its foreign trade will be closely linked to its contribution to global trade. The proportion decreased slightly after reaching a high of 14% in 2015. Nevertheless，in 2019 it rose to 13.2% from 12.8% the previous year，against the background of tariff weapons wielded by China and the US. This is proof of China's export competitiveness. This means that if China's share of global trade remains constant，its exports will shrink by 13% to 32%.
The sharp drop in exports will have an indirect effect on China's domestic consumption and investment. The reduction in foreign demand has already had a significant ripple effect on China's economy. For instance，it has caused a deterioration in the export income of Chinese enterprises and resulted in lost income for their employees. That in turn has hurt consumption. Domestic demand is being affected by weaker investment interest as enterprises turn more cautious. By analyzing the elastic relationship between exports of goods and services and total GDP using an expenditure approach，it can be seen that every 1% drop in exports affected China's nominal GDP by a fairly stable 0.22% in 2017 and 2018. In 2019，considering a further decline in the ratio of exports to industrial output，elasticity is estimated at 0.2. In 2020，if China's exports decline somewhere between 13% and 32% year on year，nominal GDP will be dragged down by 2 - 5.8 percentage points from 7.8% in 2019.
Fortunately，China is strengthening its cooperation with participants in the Belt and Road initiative. In the first quarter of this year，this strategic program supported China's foreign trade. China's exports fell 13.3% year on year in the first quarter，and trade with Europe and the US contributed 5% and 4.1%，respectively，to the decline. In the same three-month period，however，the Association of Southeast Asian Nations (ASEAN) accounted for 0% of that decline. Chinese exports to the countries participating in the initiative continued to climb，accounting for a record 38% of exports in the January-February period of this year. The export growth rate in that two-month period soared to 46.7%，becoming a key factor in China's foreign trade stability. Data from the General Administration of Customs show that China's trade cooperation with ASEAN is mainly concentrated in imports and exports of integrated circuits. China and ASEAN，as part of the global semiconductor industrial chain，have become increasingly interconnected. Another focus of their trade is crude oil and refined oil products. Vietnam and Malaysia，China's two leading trade partners in ASEAN，have fared comparatively better during the coronavirus pandemic. Malaysia saw a rise in novel coronavirus cases from late March this year，but since mid-April the number of new cases has dropped significantly. Vietnam has had a great deal of success in controlling the virus，and there have been relatively few cases. Moreover，the Protocol on Upgrading the China-ASEAN Free Trade Area came into full force for all members last October，promoting the development of agricultural trade. And for all of 2020，China's stronger trade collaboration with the participants in the Belt and Road initiative will help cushion the decline in exports.
Prospects for Industrial Shift from China
Since the outbreak of the novel coronavirus，there have been concerns about an industrial shift away from China. But such concerns are largely overblown.
China's export industries generally have a competitive advantage over their Southeast Asian rivals，for example. China's manufacturing accounted for 30.4% of global manufacturing in 2018 and its manufacturing exports accounted for 11.9% of world exports. However，the shares of Malaysia，Vietnam，Thailand and India stood at only 0.3%，0.59%，1.03% and 3.1%，respectively，lagging well behind China. Furthermore，China's population is better educated and has stronger capabilities in research and development. If the industrial chain is transferred from China and scattered across various countries，the agglomeration effect will be weakened，thereby adding to costs. Even when the US imposed higher tariffs on China's products in 2019，the share of China's exports in the global export trade did not lose ground. Instead，products were exported via the European Union and Southeast Asia. This indicates that there is no basis for a large-scale industrial shift. The tariff measures imposed by the US reduced the American trade deficit with China，but its trade deficit with the EU，Mexico，Canada，Vietnam and Malaysia expanded significantly. That led to a rise overall. Meanwhile，China's trade surplus showed signs of shifting from the US to the EU and Southeast Asia.
The pandemic is unlikely to result in a major shift in the industrial chain away from China. In fact，it is more likely that in th