China's export of information products is facing the pressure of maintaining growth

China is a major producer and exporter of information technology products in the world. The production capacity of computers and mobile phones accounts for over 90% and 70% of the world's total respectively, and the export volume of information products accounts for over 30% of electromechanical products. The changes in market demand caused by coVID-19 and the far-reaching impact of economic and trade frictions among major countries on the global industrial chain will drag down the sustained and steady growth of the overall trade and the global industrial layout.

Benefiting from the demand for home office, computer production capacity resumed, and the export of information products increased significantly. Exports of information products, such as mobile phones and computers, fell 6.6% in the first five months from a year earlier, according to China customs. Affected by the COVID-19 epidemic, the resumption of work and production of enterprises after the Spring Festival was generally delayed by more than two weeks. The increase of production capacity dragged down the export of information products in the first quarter by 18.6% compared with the same period last year. Centralized delivery in April pushed the export of foreign trade up by 12.7% in the same month, and the export of foreign trade increased by 8.9% in May.

"The demand for home-based work and study driven by epidemic control boosted the export of computer products (mainly notebook computers) by 28.2% in May compared with the same month last year. From January to May, the export dropped by only 1.5% compared with the same period last year. The short-term impact of the epidemic has been basically eliminated." Gao Shiwang, director of the industry development department of the China Chamber of Commerce for Import and Export of Mechanical and Electrical products.

Mobile phones, as the largest single commodity in terms of foreign trade exports, totaled 39.37 billion US dollars in the first five months, down 8.6 percent year-on-year. The output of microcomputers in the first five months was 121 million, up 2 percent year on year, according to the National Bureau of Statistics. Mobile phone production totaled 463 million units, down 16.5% year on year.

"The negative factors such as sluggish global demand and production capacity transfer caused by the recession caused by the epidemic are interwoven with positive factors such as the increasing demand for information technology in office and learning, and the overall export of the industry is under pressure to maintain growth." Gao Shiwang said that computer products benefit from the short-term demand driven by home office, high industrial maturity and stable market players. Foreign trade exports are flat or even slightly growing, while mobile phones are affected by global demand decline, capacity transfer and other factors, and foreign trade exports will continue to fall.

The economic and trade frictions between China and the United States, especially the tariffs imposed by the United States on Chinese goods and the continuous tightening of export controls on foreign trade, have had a significant impact on China's export of information products. The US section 301 investigation into China has added most information products other than laptops, keyboards and mobile phones, which account for more than 75 percent of its imports from China, to the list. Imports of computer products from China fell 11 per cent in the first four months of the year, far worse than the flat overall performance of US imports over the same period. The story is similar in the telecommunications sector, where imports from China fell by more than 20 per cent in the first four months compared with the same period last year for products other than smartphones.

"The continued tightening of export control policies in the US has led to more Chinese technology companies being added to the entity list, and the ban on the sale of key components and technologies has exerted significant short-term constraints on Chinese technology companies." Goshiwang said overseas sales of huawei phones began to decline in the third quarter of 2019 due to the ban on the sale of spare parts caused by us export controls, especially Google GMS service restrictions, and its global shipments fell 7.1 percent year-on-year to 56.2 million units in the fourth quarter. Although Huawei has accelerated the commercial use of THE HONGmeng system HMS, the international sales and export of Huawei's mobile phones will remain under pressure due to the tightening of US export controls and the uncertainty of global market acceptance of The Hongmeng system, and the export of Huawei's mobile phones to the international market in particular will decline significantly in 2020.

In recent years, due to the global information products gradually matures, shipments and sales are the bottleneck period of growth and decline year by year, the computer market has contracted slightly eight consecutive years, successive years of rapid growth of smartphone shipments from the 2016 peak of 1.473 billion also fell to 1.371 billion units in 2019, developed the market demand and emerging market purchasing power is not strong coexistence.

Gao Shiwang thinks, our country as an important production and export of global information product, foreign trade export, on the whole, subject to the fluctuations of global demand, in order to improve the economic and trade policy of tariffs for typical means especially big game, make the product life cycle core components for more than a year, only rely on outsourcing and lower margins (close to the characteristics of FMCG) of smart phones and other electronic products enterprises, have to quick response, timely adjustment of the layout.

"Under the general trend of tightening export controls in the United States, especially information manufacturers whose competition is dominated by technology advantages will have to do their homework. However, due to the years of division of labor and the disadvantage of latecomers, Chinese enterprises still have a long way to go. Gao Shiwang said.