Coronavirus poses new test for China’s hi-tech trade as pandemic adds to US trade war pressure

China’s position in the global value chain for hi-tech goods could see further destabilisation from the coronavirus outbreak

Already tested by a trade war with the US, China faces increased pressure from disruptions to global supply chains and international consumption

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Workers at a semiconductor company in the Chinese city of Shanghai. Photo: Xinhua

Published: 5:15pm, 8 Apr 2020Updated: 5:15pm, 8 Apr 2020

China’s position as a key processing centre for hi-tech goods is facing a fresh test as the coronavirus outbreak eats away at global demand and realigns cross-border value chains.

No product better shows China’s pivotal role in international trade flows – and its uncertain future – than smartphones.

China’s share of global smartphone production dropped to 69 per cent in 2019 from a peak of 75 per cent in 2016, as giants like Apple and Samsung diversified their production bases, according to a report issued last month by consultancy Counterpoint.

The coronavirus outbreak, which has infected more than 1.4 million people across the world and led to sweeping containment measures that have disrupted consumption, looks set to accelerate the trend.

In February, global smartphone shipments tumbled 38 per cent from a year ago to 61.8 million units, the largest decline on record, according to Strategy Analytics.

The slump in sales will be a blow to China’s smartphone factories, including Apple’s manufacturing partner Foxconn, and could further destabilise the nation’s position in the global industrial chain.