By Jonathan Garber FOXBusiness
China’s economy is getting a boost from soaring demand for tech products that make it easier and more efficient for Americans to work from home during the COVID-19 pandemic, according to economists at one Wall Street bank.
Tech shipments from China soared 37% from a year earlier in the April-through-June quarter, contributing 2.4 percentage points to the country’s overall export growth of 2%, wrote William Deng and Tao Wang, Hong Kong-based economists at investment bank UBS.
“Export shipments of automatic data processing units and parts, which include computers, tablets, monitors and parts, have seen a significant upswing since April,” according to Deng and Wang, who said Korea and Taiwan are also seeing “significant acceleration.”
Purchases by the U.S. surged 7.8% even as the total volume of imports into the world’s largest economy shrank 20%.
COVID-19, which originated in Wuhan, China, has infected more than 23.9 million people worldwide and killed 820,000, with the U.S. faring worse than any other country. Shelter-in-place orders aimed at slowing the spread of the virus have forced employees around the world to work from home, when possible.
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Because the outbreak originated in China, production in the country, and elsewhere in North Asia, was able to resume sooner — and capture market share despite facing tariffs imposed by President Trump during the trade war that led up to a partial agreement in January.
Tech demand could remain strong through the end of the year. A survey conducted in June by Singapore-based UBS analyst Alicia Chen found 44% of respondents plan to purchase a new PC in the next six months, up from 40% in February.
Made in China. Cardboard boxes with text made in China and chinese flag on the roller conveyor. 3d illustration
However, UBS warns that some customers may put off purchase decisions until economic uncertainty caused by the pandemic fades.
Another headwind for Chinese exports is supply chain disruptions that will be caused by Trump’s latest Huawei ban, which will impact the tech giant and a number of suppliers beginning on Sept. 15.
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“Huawei is the biggest player in the information and technology industry in China,” wrote Deng and Wang. “Although in the medium and long term, there is scope for other players to step up, significant constraints on Huawei will likely result in near-term negative disruptions to the tech industry in China and the supply chain.”
All things considered, the UBS economists say China’s tech shipments will remain robust in the third quarter before seeing some possible Huawei-related disruptions at the end of the year. The strength of the economic recovery will dictate conditions in 2021.
Exports accounted for more than 18% of China’s gross domestic product last year, and are helping the country’s economy emerge from its COVID-19 recession faster than any other nation.
Hong Kong-based economists at JPMorgan Chase & Co. expect the Chinese economy to expand 2.5% this year, making it the only major financial system to see growth.
Economic growth will return to the “pre-virus path in the second half of 2020, while in most countries, GDP will still be significantly below pre-virus levels by end-2021,” wrote bank economists led by Haibin Zhu.
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