China's key role in global supply chains

With East Asia, Europe and the Middle East all hit by the novel coronavirus, the world has enough reasons to believe that a recession is being baked in the oven, given these regions' collective importance to international trade, the global supply chains and world energy supplies.

The Organization for Economic Cooperation and Development lowered its projection for global growth this year from 2.9 percent to 2.4 percent on Monday. If the epidemic continues to spread for another few months in the major economies and main oil producers－which is highly possible judging from its current transmission momentum if resolute actions are not forthcoming－it will unavoidably trigger a chain reaction throughout the world economy that will leave no party unscathed.

Although China's purchasing managers index contracted 14.3 percentage points in February from January, plummeting to a historical low of 35.7, according to the National Bureau of Statistics, which is partially due to the Spring Festival holiday, it is arguably the only country that has been hard-hit by the virus whose industries and businesses are now operating at close to normal.

So far, more than 90 percent of large-scale enterprises in the Yangtze River and Pearl River delta regions, two of the country's industrial powerhouses, have resumed operation. Doing so has not only breathed life back into China's own economy and society, but also helped to cushion the epidemic's repercussions upon the world economy.

As the largest goods trader, one of the largest investors, and an indispensable link between the upper-stream suppliers and the world market, China is fully aware of the extent to which the global supply chain and world trade will be paralyzed if its industry and business lie idle.

But China putting its shoulder to the wheel alone will not maintain the momentum of the global economy, major economies must also help keep it going by ensuring their key enterprises in core industries of fundamental importance to the stability of the world economy and market, such as those in biomedicine, agriculture, manufacturing and telecommunications, maintain their operations. Otherwise, even if the Chinese factories can power ahead, they will soon run out of steam if they can't get the raw materials or parts they need.

With the situation worsening worldwide, countries need to strengthen their cooperation and coordination. Although people-to-people exchanges might be affected for the time being, the flow of other production factors, such as technology, goods and funds, should by no means be halted or impeded lest it undermine efforts to prevent a pandemic.