China’s output of industrial robots, computer equipment, and integrated circuits has roared back from its coronavirus paralysis – production for the year to November is up 22%, 10% and nearly 16%, respectively. Much of the manufacturing boom has come from foreign demand, with export growth topping expectations for eight of the last nine months. The remarkable turnaround comes as China has mostly eradicated the virus and contrasts with the sluggish comebacks seen in major industrialized peers, where factories are still struggling with pandemic disruptions and the hit to demand. China’s global export share increased to over 13% in the second and third quarters from 11% last year. Some factory managers have hiked wages by 25% to 10,000 yuan ($1,530) per month, well above the average starting wage for graduates.
Labour crunch isn’t the only constraint. China’s lopsided trade balance – exporting three containers for every one imported recently – and delays in containers returning to China due to the pandemic overseas, have created severe shipping bottlenecks, now starting to pinch exports. The yuan is also hovering near multi-year peaks against the dollar, pressuring profits further. And an official gauge of factory raw materials costs reached the highest level since 2017 in November. Export boom has been a welcome one in a tough year. The surprising resilience of China’s export sector, which employs around 180 million people, has reduced the need for massive stimulus to revive the economy this year, said analysts.