There have been calls to ‘punish China’ for its nastiest export: Covid-19. But actually, in a key market, China has also become the biggest exporter to the UK – it sells the goods needed to protect people from the virus.18 June 2020
Personal protective equipment [PPE], or a lack thereof, has been one of the defining issues of the Covid-19 pandemic. In early March, the World Health Organisation warned that global industry would need to increase production by 40 per cent to meet demand.
Meanwhile, the PPE market was described as “the wild west”, with extortionate pricing and unreliable delivery. Much of the PPE sent from China to Europe was rejected by governments as sub-standard. Across the globe, including in the US and the EU (and, by extension, the UK), export restrictions were placed on these goods to prevent domestic shortages.
So far, so anecdotal. However, we now have trade details that allow us to see how the UK fared in the great global battle for PPE in March and April at the height of the crisis.
In mid-March the European Commission imposed restrictions on exports of PPE from the EU (as well as the UK). These expired at the end of May, but the initial list of restricted items sets out the critical goods at risk of running short. These cover protective spectacles and visors, face shields, mouth-nose-protection equipment, protective garments and gloves.
Using the commodity codes for these goods, we can isolate them in the trade data, courtesy of HMRC.
A number of trends become clear by doing so. First, in March – as reflected in the anecdotal evidence – the UK struggled to get hold of these items as the pandemic began to take hold in Europe.
Overall, PPE imports fell by 12 per cent in March compared to a year earlier, from £280m to £245m. This came at the point that demand was beginning to peak, with daily covid hospital admissions in England peaking at just over 3,000 on 1 April.
A large part of the reason was a sharp fall in PPE imports from the UK’s two most important sources: China and the EU. Chinese imports fell by 25 per cent compared to a year earlier, and those from the EU by 14 per cent. Within the EU, imports from Germany fell especially sharply (-17 per cent). Meanwhile, goods from the US made up for some of this, rising by 30 per cent, albeit overall PPE imports still remained lower than from Germany.
Despite the grim picture in March, the situation saw a remarkable turnaround in April. PPE imports rose by 45 per cent compared to a year earlier, reaching £375m, from £260m in April 2019. This was entirely attributable to a massive spike in imports from China, which rose by more than 250 per cent compared to a year earlier. For mouth-nose-protection equipment, Chinese imports increased more than twelve-fold, from just £10m to £127m.
Without these Chinese goods, overall PPE imports would have fallen again in April. PPE from the EU fell even more sharply than in March (-25 per cent). The EU share in April fell to just 19 per cent of the total, down from 36 per cent a year earlier. Meanwhile, US PPE imports continued to grow, rising by 13 per cent, overtaking Germany.
Part of this pattern in Chinese imports probably reflects the lag time in imports arriving. Shipping cargo takes around six to eight weeks to reach the UK from China.
By comparison, the lag time from the east coast of the US is more like four weeks. It is hard to avoid the conclusion that earlier attempts to procure such equipment would inevitably have meant fewer shortages.
The trade flows in April vastly increased UK dependence on China for PPE imports. Remarkably, just over half of all UK PPE imports in April came from China, up from around 20 per cent a year earlier. This is a substantial reorientation of the UK’s PPE import geography, with 81 per cent coming from non-EU countries in April, compared to 64 per cent a year earlier.
These data also reveal a reversal of a longer-term trend of a falling reliance on Chinese PPE imports. The Chinese share of UK PPE imports had fallen from a third of the total in 2015 to a quarter in 2019.
Now for an important caveat. These data are based on import values not volumes, so they could be vulnerable to changes in prices. Given the extremely high global demand for these goods in March and April, part of the spike in imports from China and the US could be down to price rises for these goods. In simple terms, PPE volumes probably did not increase as much as the value of imports suggests.
These startling figures show there are few alternatives. The sheer capacity in the Chinese economy to produce such goods at speed and scale will be difficult to replace. If the persistence of the virus means a near-permanent increase in demand for PPE, it could also mean a near-permanent increase in dependence on China for such goods.
Matthew Bevingdon is a researcher in the Changing Europe think-tank based at King’s College, University of London.