MARKET SPOTLIGHT
CHANGE IN CHINA Competitive Advantage No Longer a Given
BY THOMAS TIMLEN
W
hile multinational corporations have been adding manufacturing capacity in China for more than 40 years, more rigorous project planning will be required to fully capture China’s competitive advantage moving forward. This is a key conclusion drawn by Christos Lampris, Independent Project Analysis, or IPA, Asia Pacific research lead, in a report published in June. Even before additional Covid-related
uncertainties arose in 2020, China’s cost competitiveness gap with the West was narrowing, making investments in manufacturing there less attractive while China’s regulatory environment became increasingly unpredictable, complicating existing and planned projects in the region. Speaking to Breakbulk, Lampris said that at the time that report was being written, existing construction projects were resuming work and there was an increase in infrastructure expenditure by the Chinese government in an attempt to rejuvenate the economy.
“However, there was uncertainty about how our predominantly multinational clients from the extractive and processing industries would react to the Covid-19 landscape, especially when it comes to planned capital investments in China,” he said. This was not only because of the direct effects of the pandemic, such as supply chain disruptions, but also because of a reduction in spending due to the overall economic outlook, exposure to low oil prices for some firms and the trade war between the U.S. and China.
Top: Some China joint venture projects are continuing, including construction of the Amur Gas Chemical Complex, an integrated polyethylene and polypropylene production facility being jointly developed by Sinopec and Russian petrochemical company Sibur. CREDIT: GAZPROM
82 BREAKBULK MAGAZINE www.breakbulk.com
ISSUE 6 / 2020
