Chinese President Xi Jinping’s surprise visit to the port city of Ningbo in Zhejiang province on Sunday – his first outside the capital since his tour to the coronavirus epicentre Wuhan on March 10 – sent a strong signal that Beijing is ramping up efforts to protect the domestic economy and its role in global value chains.
It is becoming increasingly clear that the spread of the coronavirus pandemic will deal China’s export-oriented economy a heavy blow, threatening China’s economic stability, the employment of millions of its citizens, and its future role in the world economy.
So it was no surprise that the Chinese leader’s visit to Ningbo was intended to check on the “resumption of production and business operations” now that the outbreak has passed its peak in China, according to the official Xinhua news agency, with the clear focus of the tour on the economy.
It was in stark contrast to his Wuhan visit three weeks ago, when Xi’s message was that the coronavirus outbreak in China was largely under control. Since then, the number of new cases has continued to fall, with just 31 reported on Monday and all but one of those imported from abroad.
William Deng, an economist at UBS, noted that Xi’s trip to Zhejiang indicated the shifting priorities of Chinese leadership as Beijing was increasingly concerned about the stability of global value chains, with industries the world over dependent on Chinese production.
“China has an important position in the global value chains, and Zhejiang plays a crucial role for value chains in China,” Deng said. “A smooth resumption of production and business operation in Zhejiang, would matter to the recovery of global value chains [from the shock of coronavirus].”
The port of Ningbo, just south of Shanghai, is one of the key points linking China’s manufacturing industry with the rest of the world.
The harbour, in combination with neighbouring Zhoushan, is the world’s third largest container port, handling 27.5 million standard containers last year. The port’s development involved Xi’s personal intervention – Ningbo and Zhoushan merged into one operation in 2005 when Xi was party secretary of Zhejiang province.
The Chuanshan container port zone visited by Xi on Sunday forms the core of the logistics hub, handling 10.35 million containers in 2019, or about three times its turnover in 2009.
The brief state media report did not include any comments from Xi about global value chains during his trip. According to the pictures and videos broadcast by China’s state media, Xi inspected the huge port with mountains of containers in the heavy rain. In one picture, Xi was not wearing a face mask.
In late February, Xi urged local authorities to pay attention to trade and foreign investment to safeguard international supply chains from disruption.
In the latest Politburo meeting last Friday, Xi said China must ensure the smooth operation of international logistics facilities to keep trade moving, even as the country was continuing to minimise personal interactions to avoid a resurgence of the coronavirus outbreak.
Xi’s trip to Ningbo “is a clear signal to maintain stability of the global industrial supply chain,” China’s state television reported.
The province of Zhejiang is part of the Yangtze River Delta, one of the country’s major manufacturing hubs. As such, it is a key export base and source of fiscal revenue for the entire country, with a vibrant private-sector economy based on an army of small and medium-sized enterprises.
With an economy bigger than Turkey and a population the size of South Africa, the province is also known as a political power base for Xi, who worked as the province’s party boss for five years from 2002 before he moved on to a larger role in Beijing.
In many respects, Zhejiang has been promoted as a model of governance under Xi in terms of economic development, environmental protection and efficient government services.
During the coronavirus outbreak, Zhejiang was the first province to declare the highest level of emergency – ahead of Hubei, where the first cases of the new disease were reported – but it has also been one of the most aggressive provinces in encouraging and helping migrant workers to return to their jobs from their homes inland.
On Monday, Xi visited a rural village in Zhejiang’s Anji county to check the progress of “green development”. In 2005, Xi, then the provincial party secretary, stated that “green mountains and clear water are equal to mountains of gold and silver” in Anji, and his idea of putting the environment on a par with economic development later became a national policy.
Xi also visited ZDM Zhenzhi Machinery and Mould, one of the car parts manufacturers based in an industrial estate next to the port. According to the company’s website, the privately-owned car parts designer and manufacturer has hired 142 new workers since resuming operations and has been exporting products to Germany, France and Japan.
According to a video published by state broadcaster CCTV, Xi told local officials and private business executives that Beijing was trying to make new policies to help China’s small businesses survive the economic damage caused by the pandemic.
“I am here to listen to your views so that our policies can be more targeted,” Xi reportedly said.
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