Covid’s Latest Victim: Textbooks

As students head back to school this month and countries around the world cobble together education systems for the fall with Zoom and duct tape, the increase in distance learning and home schooling appears to be hurting trade in what’s become a core technology: textbooks.

Officially counted under national tariff codes such as 4901990010 (U.S.) and 49019930 (Bahrain, Qatar, and Saudi Arabia), textbooks imports have been sagging around the world, according to Trade Data Monitor.

Shipments to the U.S., Canada, Mexico, Turkey, and to nearly every country that measures textbook imports, have plummeted.

In the U.S., for example, shipments in the first seven months of 2020 shrank 32.1% to $88.9 million from $130.9 million over the same period in 2019.

Textbook sales have suffered, with exports dropping in countries from Norway to Saudi Arabia. For example, textbook exports from the United States, the world’s second largest exporter of books, fell 23.8% to $176.3 million in the first seven months of the year.

Ironically, the decline is not part of a systemic trend. Despite advances in high-tech learning, teachers and students still use lots of textbooks. In 2000, over the same period, U.S. textbook imports amounted to only $160.1 million.

Textbook Imports; Millions USD; January-July 2019, January-July 2020; United States (4901990010); Canada (4901990021, 4901990022); Turkey (490199001000, 490199004011); Qatar (49019930); Bahrain (49019930); Norway (49019902, 49019905); Source: Trade Data Monitor LLC; September 14, 2020

There are only a few outliers in this textbook import bust, including New Zealand and Norway, which have allowed children back in classrooms, and Saudi Arabia, which has emphasized distance learning instead.

Meanwhile, trade in high-tech goods, including computers, smart phones, and webcams, is surging.

It may be premature to declare the death of the textbook, but it’s yet another pre-pandemic custom that will have some catching up to do.

China’s Strong August Exports Fueled by Medical Masks, High-Tech

The business of China is strong. The country’s exports increased to $235.3 billion in August, up 9.5% compared to the same month a year ago.

Because China still reigns supreme as the world’s top maker and exporter of manufactured goods from car parts to computers, its trading performance is closely watched as business and government leaders try to figure out where the global economy is headed in the midst of the Covid-19 pandemic.

There are reasons for concern. Overall, from January to August, Chinese exports declined 2.3% year-on-year to $1.6 trillion, and imports fell 5.2% to $1.3 trillion. The International Monetary Fund has predicted a 4.9% decline in global gross domestic product.

But the latest figures, available in detail from Trade Data Monitor, suggest that a high-tech rebound anchored by consumer demand in Europe and the U.S. remains strong. In August, exports of mobile phones increased 23.3% to $9.9 billion. Shipments of high-tech products rose 12% to $67.1 billion. It’s not just consumer goods, either. Exports of integrated circuits increased 10.9% to $10.3 billion.

This high-tech surge doesn’t just help China. Over the last 20 years, Big Tech has built global supply chains that range from San Francisco to Shenzhen. As long as this trend continues, it’ll help software designers, graphic designers and factory workers across the world.

The question is how long this can last if the pandemic hits a rough second wave and markets become saturated. You can only own so many iPhones.

China’s export data continues to show how much Covid-19 has affected lifestyles. With people being discouraged from going places, exports of shoes fell 17.8% to $3.4 billion.

The medical response to the pandemic has relied on gear made in China. Exports of textiles and fabrics including the protective medical masks everybody is wearing increased 48.5% to $14.7 billion.

One reason some analysts are worried about how long China’s current export surge can last is its imports, which declined 2.1% in August to $176.3 billion.

As the first country to go through a coronavirus wave, China is also a barometer for how its consumers are reacting to going back to normal. And, by some measures, its economy is performing just fine. Imports of high-tech products increased 4.9% to $58.9 billion.

But China’s imports include large quantities of raw materials and parts used to manufacture consumer goods, so they are an indication of wider medium and long-term business confidence.

Imports of copper ores and concentrates, used to make wires and other key components in electronic and electromechanical goods, declined 12.6% to 1.6 million tons. Shipments of auto parts into the country also fell.

To be sure, part of the decline in headline dollar value is being driven by falling commodity prices. Crude petroleum imports, for example, fell 25.2% to $14.9 billion, but increased 12.6% by mass to 47.5 million tons. But that’s also telling about the rest of the global economy: Prices are down because there’s less demand.

Import data suggests China’s agricultural sector is strong and that consumers may be stockpiling key foods. Fertilizer imports increased 42% to 925.6 thousand tons. Meat imports rose 52.2% to $2.3 billion, while shipments to China of cereals, legumes, tubers, sago and soybeans rose 8.8% to $4.5 billion.

If anything, the pandemic seems to be accentuating China’s trade surplus with countries around the world. In August, that surplus was $58.9 billion, up 69.7% from $34.7 billion in August 2019. Exports to the U.S. increased 19.8% to $44.8 billion, while imports rose only 1.3% to $10.5 billion.

China’s Trade Surplus Rises in July on Exports of Stay-at-Home Technology and Lower Commodity Prices

Chinese exports unexpectedly rose in July, thanks to booms in demand for high-tech gear needed for workers staying at home, according to an analysis by Trade Data Monitor, the world’s premier source of export and import statistics.

As the world’s number one manufacturer and exporter of consumer and industrial goods, China is considered a bellwether for the global trading economy. How it does is a key measure of how long the world will take to rebound from the Covid-19 pandemic.

In July Chinese exports rose 7.2% year-on-year to $237.6 billion and imports declined 1.4% year-on-year to $175.3 billion, according to Geneva- and Charleston-based TDM. That boosted China’s trade surplus with the rest of the world, lifting it to $62.33 billion from $46.42 billion surplus in June. Economists had expected exports to fall and imports to increase. The flip was partly caused by a decline in commodity prices and an unexpected boom in demand for high-tech goods including mobile phones.

After half a year of the pandemic, some trends are emerging. The European Union and U.S., whose citizens were helped by generous stimulus packages, are doing better than the rest of the world. Chinese exports to the U.S., Europe, and ASEAN countries were all collectively higher in July 2020 than the same month a year ago. Exports to the U.S., for example, increased 12% to $43.7 billion, while imports increased 3% to $11.3 billion, widening the U.S.-China trade deficit. However, shipments to India, Africa and Latin America declined, suggesting that the global economic contraction is already hurting the world’s emerging economies.

China’s mighty strategic advantage during the pandemic is that its factories make everything people need to survive, communicate and work during a time of stay-at-home orders and remote work lives.

Another trend revealed by Chinese trade data is a bifurcation of the global economy into stationary and mobile goods. Anything that involves physically moving around is slumping, and anything that helps people when they’re grounded is thriving.

For example, Chinese exports of bags and containers used to travel fell 23% to $1.9 billion. Footwear: Down 23% to $3.6 billion. Shipments of auto parts fell 15% to $4.6 billion.

But exports of high-tech goods increased 16% to $69.4 billion. Mobile phones jumped 43% to $11.1 billion. Furniture exports rose 23% to $5.5 billion. Home appliance shipments rose 37% to $6.6 billion. Even exports of toys rose 22% to $3.5 billion.

And exports of medical devices soared 78% to $2 billion in July.

The big question for the world in 2020 is how fast regular industrial activity might resume. The picture here is murkier. China increased imports of petroleum 25% by volume, but its exports of steel products declined 25% to $3.6 billion.

China’s imports fell in dollars, which was partly a reflection of falling commodity prices around the world. As a manufacturer of finished goods, China tends to import raw materials and export consumer products.

Although China continued to ramp up purchases of some food commodities, like cereals (+27%) and soybeans (+16%), the pictures was more mixed for key industrial commodities. Imports of iron ore increased 24% to 112.6 million tons, while copper declined 13% to 1.8 million tons. Imports of primary plastics increased 22% to 3.8 million tons.

Bangladesh Textile Firms Look to Asian Markets to Recover From Covid-19 Crisis

The Covid-19 pandemic has cast a pall over clothing retail markets in the U.S. and Europe. With iconic firms like Brooks Brothers and JC Penney battling bankruptcy, Asian textile manufacturers have lost billions of dollars in orders.

That’s hit Bangladesh’s garment sector, the world’s second largest, particularly hard. The country is heavily dependent on the textile industry, which employs four million people and generates around 85% of export earnings.

The crisis, which forced over 150 factories to temporarily close, has prompted manufacturers to look for new markets, particularly in Asia. That’s where population growth and economic development are creating tens of millions of new middle class consumers.

In the first five months of 2020, with exports to almost every country plummeting, South Korea ramped up imports from Bangladesh 9.4% to $155 million, according to Trade Data Monitor, the world’s premier source of export and import statistics. By comparison, textile shipments to the U.S. fell 12.2% to $2.2 billion.

While global textile trade in 2020 has been slipping compared to the year before, key Asian countries had been steadily boosting purchases from Bangladesh, a trend that should resume once the pandemic ends. South Korean imports of textiles from Bangladesh increased to $335.1 million in 2019 from $170.7 million in 2014, while Chinese imports rose to $590 million in 2019 from $335 million in 2014.

And last year, manufacturers reported an increase in interest from U.S. buyers seeking protection from the U.S.-China trade war. Since two factory accidents in 2012 and 2013 killed almost 1,000 workers in Bangladesh, U.S. customers had shied away.

The problem now is that Covid-19 is tearing apart economies and demand in ways that have nothing to do with taste, culture or politics. Bangladesh, like everywhere else, will have to get back on its feet, and, almost certainly, will need textiles to do that.

From the 16th to the 18th centuries, Bengal, a large region on the Indian subcontinent including modern-day Bangladesh, was a significant center of cotton and silk production, much of it going to rich markets in Europe. The East India Company colonized Bengal in 1757, which led to deindustrialization. Raw cotton was shipped to England for transformation into textiles, which were then exported to Bengal.

In the 1980s, after enduring a war for independence and a devasting famine in the 1970s, Bangladesh denationalized hundreds of textile manufacturers, set up export processing zones and invited foreign investors and advisers, especially from the U.S. The result was a flurry of contracts with designers and retailers in the U.S. and Europe, making “Made in Bangladesh” a common tag on clothes around the world. Bangladesh’s accession to the World Trade Organization in 1995 solidified its place as a key player in global trade.

In 2019, Bangladesh exported $34.7 billion of textiles, second in the world only to China with $138 billion, according to TDM data. Vietnam was third with $31.4 billion. Germany was fourth with around $23.9 billion.

To be sure, the West is still where the buyers are. The U.S. is the world’s top importer of garments, shipping in $84.7 billion in 2019, ahead of Germany, with $38.5 billion, and Japan, with $28 billion.

But nobody knows how bad the impact of Covid-19 will be. In the first five months of 2020, U.S. garment imports were down 25.6% to $24.9 billion. Imports from China fell 42% to $5.4 billion.

And, in the long run, the demographics don’t lie. Bangladesh, with over 160 million people, is the world’s eighth most populous country. Of the top five nations in the world by population, four are in Asia. Bangladesh has some clothes to sell them.

China’s June Trade Rebound Offers Hope, But Can’t Ease Global Economic Fears

As the first country to suffer a Covid-19 lockdown China, the world’s top exporter and trading power, has been under scrutiny. Now it offers hope: In June, Chinese monthly imports increased 2.7% year-on-year to $167.2 billion, and exports rose 0.6% to $213.6 billion, according to Trade Data Monitor, the world’s top source of export and import statistics.

With imports rising faster than exports, China’s trade surplus declined to $46.4 billion in June from $62.9 billion in May, another signal that Beijing’s mighty export machine may have to increasingly rely on the country’s own market of 1.4 billion people.

The June rebound flipped a dismal trend: In May, exports had declined 3.3% year-on-year, and imports 16.7%. And China’s buying resurgence was broad-based: It ramped up imports of meat (+74% year-on-year), cereals (+78.5%), iron ore (+17.4%), soybeans (+73.4%), steel products (+34%), and integrated circuits (+18.6%), according to TDM.

These strong import numbers suggest that China’s sprawling manufacturing machine is kicking back into gear after weathering a long season of Covid shutdowns, which led to China’s GDP declining 6.8% in the first quarter, its worst outcome since the 1960s. The buying suggests that Chinese factories will soon have recharged pipelines of goods to sell and that big Chinese industrial and agricultural buyers are now stocking up on essential commodities.

The question is who’s going to buy what the Chinese are making. The canary in the coal mine is the lack of consumer spending, especially in the U.S. and Europe, as economies continue to roil from lockdowns. The International Monetary Fund projects a global GDP contraction of 4.9% in 2020.

In China’s June export results, there are signs of that demand unease. Chinese footwear exports fell 28.4% to $2.9 billion, bags and containers shipments declined 31.1% to $1.7 billion, steel product exports shrank 26.4% to $3.4 billion, and automobile spare parts shipments dropped 26.3% to $3.7 billion, according to TDM.

There are sectors of resiliency, particularly in medical care, and in the technology people need when they’re stuck at home. Shipments of mobile phones rose 29.8% to $9.2 billion, and exports of medical devices increased 100.2% to $2.1 billion.

And China made good on a promise to hike purchases of U.S. soybeans. Shipments from the U.S. increased 10.8% to $10.4 billion, beating a 1.5% rise in exports to the U.S. to $39.8 billion. By comparison, Chinese exports to the European Union increased 10.6%. While Beijing seeks new markets in Europe, the long-term trend with the U.S. still points towards a diminishing of that essential trade relationship: In the first six months of 2020, Chinese exports to the U.S. declined 11.1% to $177.6 billion, while imports fell 4.7% to $56.4 billion.

Above all, China’s June trade numbers reinforce the most important trend in global trade right now: Around the world, economies are being carried by robust increases in the trade of a catalog of specific sectors, such as communications technology, medical supplies, pharmaceuticals, gold, and commodities like soybeans, that are obscuring the depth of economic damage.

Once countries have enough medical supplies, demand for gold ebbs, and countries and companies get the commodity stockpiles they need, Chinese exports are almost certain to shrink again without Western consumers buying shoes, clothes, furniture, and other durables.

While China’s promising June trade numbers signals that the world economy is far from dead, what the data can’t do is tell us what’s coming if consumer demand doesn’t get up off the floor.