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Boao report eyes Asia’s role in global economic recovery

Date: 2021-04-29

The growth rate of the Asian economy in 2021 is expected to reach at least 6.5 percent and Asia should be a major engine for sustainable global recovery, according to a report released by the Boao Forum for Asia (BFA) on April 18.

The report called "Asian Economic Outlook and Integration Progress Annual Report 2021" noted that under the impact of the COVID-19 pandemic, Asian economies have experienced a sharp decline in economic growth, but their economic performance has been significantly better than that of the rest of the world.

In general, the economic growth rate of Asian economies in 2020 was -1.7 percent, down 5.7 percentage points from 2019, 3 percentage points higher than that of advanced economies, and 0.3 percentage points higher than that of European developing economies, the report said.

The report noted that in 2021 the Asian economy will experience recovery at a growth rate of more than 6.5 percent. The growth rate of South Asia is expected to exceed 8.5 percent. However, the pandemic will still be the main variable that directly affects the performance of Asia’s economy.

The pandemic caused the disruption of some production networks in Asian factories, which intensified the damage to Asian global value chains. The repost said that overall, the pandemic poses a huge challenge to the integration of production in Asia.

The report shows that in 2019, the integration index further increased. Major Asian economies' trade dependence ratio on countries within Asia is nearly 50 percent or above, according to the report.

According to the report, major Asian economies are still highly dependent on Asian factories, and most Asian economies depend more on Asian factories year by year.

The report also pointed out that although the pandemic in 2020 disrupted some of the production networks of Asian factories, it did not shift the center of Asia's global value chain. Asian factories rely on China to a much higher degree than the United States, Japan, or other Asian economies. Among Asia's top 22 parts and components in terms of trade volume, 18 of them mainly rely on China.

The metabolism and fierce competition brought about by the new round of technological revolution and industrial transformation are unprecedented. In particular, the pandemic has impacted parts of the global industrial chain and supply chain, and the global industrial chain is facing profound adjustments.

Some analysts point out that, on the whole, regionalization, localization, digitalization, networking and intelligent development of the global industrial chain will be the long-term trend in the future.

According to a 2020 McKinsey report, in response to changes in the global industrial chain, 93 percent of companies have plans to make the chain more flexible. Forty-four percent of surveyed companies chose to strive to improve the industrial chain even at the expense of certain short-term economic benefits.

The results showed that there are various ways to make the industrial chain more flexible. Except for “relocation back to China”, diversification of the supply of raw materials (53 percent), increasing research and development of key products (47 percent), strengthening of near-shore procurement and expansion purchase bases (40 percent) and regionalization of the supply chain (38 percent) are all under consideration by companies.

The textile industry is a traditional pillar industry in China. China has established the most complete modern textile manufacturing industry system in the world, but the development of various links in its industry chain is not balanced. Under the new situation, the textile industry is required to develop new competitive advantages while maintaining its traditional ones to create a stronger industrial chain in the global transformation.

Some experts believe that the existing shortcomings in the domestic textile industry chain are due to the imperfect innovation system, insufficient professional and technical personnel, and low profits. In addition, related standards, testing, and data management must be further improved.

To build a stronger textile industry chain, the government should attach great importance to the upgrading of the textile industry chain, accelerate the improvement of the industrial innovation system, develop intelligent manufacturing, strengthen the construction of a textile standards system, develop more related talents, expand the application of domestic demands, optimize the domestic industrial layout, and guide enterprises to conduct overseas investment in a reasonable and orderly manner.