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A new study by the United Nations Conference on Trade and Development (UNCTAD) has shown that total commodity exports to China could fall dramatically as a result of the coronavirus crisis. The report also shows that there may be a silver lining for some products.

As part of the research findings, global exports of commodities to China could plunge by $15.5 billion, to $33.1 billion, in 2020. This would represent a drop of up to 46 per cent, compared with annual growth projections before the coronavirus pandemic hit.

The findings raise concerns for economies that rely on exports of primary goods, such as energy products, ores and grains. Some two-thirds of developing countries are commodity dependent according to UNCTAD data.

For commodity-dependent developing countries, some of the most vulnerable on the planet, the drop is projected to be between $2.9 billion and $7.9 billion, which would constitute a 9 per cent loss in terms of annual growth rate.

China absorbs about one-fifth of the world’s commodity exports, therefore, such a drop in its imports would have a dramatic impact on producers of primary goods, says UNCTAD.

“Assessing the impact in China says a lot about possible general tendencies,” says Marco Fugazza, an UNCTAD economist who conducted the study. “It provides important information that may help policymakers anticipate what may happen globally.”

Total exports are being dragged down primarily by the dramatic drop in Chinese demand for energy products, ores and grains. Imports of liquefied natural gases, for example, could fall by up to 10 per cent in 2020 compared with a projected increase of 10 per cent before the COVID-19 outbreak.

Iron imports are still expected to increase, the study says, but growth could fall by two-thirds, from a pre-coronavirus annual growth projection of 19 per cent to just 6 per cent.
Wheat imports are now projected to decrease by 25 per cent, twice as much as before the crisis.

While exports of most commodities are expected to take a hit, the study projects a positive outcome for several agricultural products compared with expectations before COVID-19. Chinese imports of soya beans from commodity-dependent developing countries, for example, is now projected to grow by 34 per cent – a 10 percentage points increase over earlier forecasts.

Similarly, the annual growth rate of imports for copper from these nations is expected to double, from a 5.4 per cent projection pre-pandemic to 11 per cent. These variations at the product level could lead to very different outcomes at the country level.

“While large exporters of natural gases to China, such as Myanmar, may see their trade perspectives deteriorate because of the coronavirus pandemic,” Mr. Fugazza says, “other countries such as Equatorial Guinea may see an exponential increase in, for example, exports of wood.”

The data gives hope that some COVID-19 effects on trade could be positive, at least for some exporters. “A necessary condition for this to happen,” he says, “is the removal of any pandemic-specific trade interventions, such as export restrictions.”