China’s world-factory status gets boost as coronavirus ravages India and other developing Asian countries
- Money flowing into north Asia as investors have been selling financials, industrials and materials in India while buying those in Korea and Taiwan
- China’s advantage as a manufacturing powerhouse remains resilient while its neighbours struggle to reinvigorate their economies
A sharp uptick in coronavirus cases in India and several Asian countries is diverting business to China, ensuring that its manufacturing engine will continue being the main driver of global trade demand, analysts said, pointing to the resilience of China’s economy and capital flows.
Last year, the Asia-Pacific region outperformed amid its significantly lower infection and death rates relative to other regions. However, several domestic economic recoveries are being threatened by a combination of the emergence of more virulent strains globally, recurring waves of Covid-19 and sluggish progress in public vaccinations, according to analysts.
Of particular note is India, which has seen daily Covid-19 cases surge to unprecedented levels, making it the second-worst-hit country based on total infections.
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“Previously, everyone thought China’s lead in getting the virus under control would fade away as the US and UK gradually opened up their economies and boosted global demand,” said Carie Li Ruofan, an economist at OCBC Wing Hang Bank.
“But because the epidemic is still quite severe in parts of Asia, China is going to have to keep playing the role as the world’s factory.”