Challenges and Changes Faced by the Chinese Supply Chain as a Result of the Pandemic
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Challenges and Changes Faced by the Chinese Supply Chain as a Result of the Pandemic

1.0  Introduction

When it comes to the disruptions of the global supply chain (GSC) by the pandemic, China is at the center of discussion for two main reasons. Firstly, it is the first country where the first Coronavirus infection was detected and the first to implement lockdown and social distancing regulations. Secondly, China is a major global economy, a destination for an array of raw materials and finished products, and a source of an extensive array of products, some of which were essential throughout the pandemic. As a result, a small disruption in the Chinese supply chain would likely have global-scale implications. According to Jain (2022), the head of shipping at HSBC, any small disruption in the Chinese supply chain would lead to a global ripple effect, indicating the lean nature of the supply chain. Recent data since the pandemic began to testify to this outcome. For instance, in an interview with supply chain executives in China, Textor’s (2021) interviewees highlighted an affected supply chain, decreased revenue, and decreased demand for products and services. According to Curran (2022), the Chinese situation made the “mother of all” supply chain stumbles, a cause of challenges and changes. Lessons from the Chinese supply chain, particularly on how the country has faced challenges and emerging changes, are essential in understanding the current nature of the global supply chain. Such lessons should be part of academia and the public discourse. Thus, the current study aims to establish how the Chinese supply chain has faced challenges and changes due to the pandemic. In this regard, the study question is: how does the Chinese supply chain face the challenge and change due to the pandemic? Several studies have tried to answer this question or at least some aspects. In order to address the study question, the following specific research question will be addressed: The research mainly revolved around two critical questions;

1. How can text mining supply insights on the impact the COVID-19 pandemic had on the Chinese Supply Chain?
2. What are the implications of the COVID-19 pandemic for the resilience and sustainability of supply chains in China?

With experts agreeing that a disruption in the Chinese market has a global impact, this research is necessary because it highlights the fragile nature of the global supply chain. However, taking lessons from the pandemic on how the leading economic power in navigating the pandemic is critical because these lessons can be applied to other nations or even the entire world. Thus, this research is essential because it is geared toward developing knowledge on the efficiency and reliability of the GSC in the face of pandemics or other disasters. Thus, a key implication is that lessons can be used to strengthen national and regional or global supply chains.

2.0 Literature review

2.1 Section Introduction             China is a focal point of multiple value chains by processing and shipping goods to international markets. In the US, for instance, imports from China accounted for 18.6% of US imports in 2020 (USTR, 2022). Compared to 2001, this has been an increase of over 325%. Since 2009, China has been the number one exporter of goods. The country imports from 81 countries and exports to an estimated 117 countries, highlighting its importance within the global supply chain (OEC, 2022). Aside from imports and exports, the country is also an important transportation hub with extensive territorial and air transport systems. Thus, any disruption in the Chinese supply chain is bound to have global consequences. In academia, such occurrences are worth studying, especially how a country reacts, as means of interrogating existing supply chain frameworks, structures, and theories or formulation of new ones. For this reason, it is essential to assess what scholars and researchers have said so far about the challenges and changes faced by the Chinese supply chain. 2.2 Focus of Existing Literature While existing literature has focused on China’s supply chain, they have either focused on a specific or several specific topics. This is advantageous because each article provides a different point of view on the problem. Some articles assess the impact of the pandemic on the GSC. For instance, Barlow et al. (2021) premised that the Scale of the Covid-19 pandemic is a consequence of globalization and international trade. In other words, without these two global forces, the current global infection extent would not have occurred. Thus, mitigating the pandemic would not have been successful without interfering with these global forces. However, through lockdowns and social distancing measures, the outcomes of disruption included a reduction in supply and demand. Similarly, Guan et al. (2020) established an array of GSC problems by linking control measures to global disruption in the supply chain. The authors utilized the latest global trade modeling framework in this study to analyze several idealized lockdown scenarios (Guan et al., 2020). They established that supply chain losses depend on the number of countries with imposed restrictions and that the duration and strict measures influence the extent of losses. China was among the countries with the strictest measures though its duration was similar to other developed nations. Thus, Barlow et al. (2021) and Guan et al. (2020) agree that mitigation measures were the biggest causes of problems or challenges faced by the global supply chain. Some researchers have taken a similar approach but focused on disrupting trade flows by government measures or responses. For example, Barbero et al. (2021) examined the impact of the pandemic on bilateral trade flows by utilizing a state-of-the-art gravity trade model using trade data from 68 countries. They established that countries with bilateral trade agreements were impacted significantly. Further, the authors established that this impact depended on government reaction, and its intensity increased if countries within a trade agreement had identical income levels. The findings indicate the interconnected yet fragile nature of the global supply chain, with China at the center because of its importance in modern global trade. Other researchers and scholars have focused on China and specific sectors of the economy. For instance, Ijaz et al. (2021) focused on meat production and supply. The authors contended that the pandemic impacted meat production and the industry’s supply chain. At first, there was an increase in meat prices due to panic buying, which caused a surge in demand. Afterward, production and demand decreased due to the low purchasing power of buyers and lockdowns. As early as April 2020, meat production and supply facilities were shutting down (Ijaz et al., 2021). Further, producers and processors faced challenges in harvesting and shipping due to international travel restrictions. In additional research focusing on a single industry within China, Song et al. (2021) investigated the challenges and potential changes within the manufacturing industry. In terms of manufacturing output, China leads the global economy with over $2.0 trillion worth of products, mainly for export. In this study, the authors used the notion of TiVA to simulate and assess the pandemic’s impact on the sector in VGC reconfiguration. Thus, the authors established that Chinese manufacturing was significantly impacted, and the effect was felt in other countries like the United States. Taking the approach to a specific sector, Xu et al. (2021) directed their focus on the transport sector. The transport sector is a core element of any supply chain and is particularly important for China because of its global reach via sea and air transport. Xu and colleagues established that Chinese transportation and logistics were impacted differently based on the mode of transport. Airfreight, for instance, was the most impacted, while ocean trait was not significantly impacted. Aside from focusing on specific industries, some authors also directed their efforts to other outcomes of international trade like emissions. In this regard, Shi et al. (2021) examined the emissions and economic impact of reorganizing supply chains with China and Australia. Estimations from the study indicate that disruption in the supply chain between China and Australia alone has global ramifications. Further, such a disruption will cause an increase in global emissions as economies strive to fill the niche left by the disruption. These findings are essential because they place the chain at the center of the global supply chain. Similarly, Evenett (2020) established that international trade partners increasingly depend on China. According to the author, the pandemic has provided a challenge to reconfigure supply chains. 2.3 Relationships between Articles The eight articles in this analysis complement each other and agree that the impacts of the pandemic have been across the Chinese and global supply chain systems. Across studies, there is no doubt that the Chinese and global supply chains faced challenges and a need for change. Some key recommendations highlight this observation. For instance, having established the global dependence on China, Evenett (2020) called for countries to reconfigure their supply chain policies to reduce dependence on China. Similarly, Ijaz et al. (2021) proposed localized production, i.e., supply that is as close to people as possible, to limit the influence of disruptions in the transport sector. These two examples only highlight a few ways the articles agree or compliment each other.   However, there are also some points of diversion among different authors. For instance, Barbero et al. (2021) singled out countries with similar income levels and those that had trade agreements before the Pandemic to experience disproportionately negative impacts than others. According to Xu et al. (2021), the pandemic has primarily impacted the Chinese industrial, financial, transportation, and logistics sectors, the critical drivers of shipping and fulfillment in the global value chain (VGC). This impact is similar across high-income trade partners. However, taking a different view, Song et al. (2021) argue that China has been able to withstand the pandemic shocks with the rise in domestic labor costs that have driven up export prices and, therefore, business. Thus, while Barbero et al. (2021) and Xu et al. (2021) lament how China, with its multiple trade agreements, has suffered, Song et al. (2021) provide a contradictory and positive view on the same. On the aspect of the trade, Barlow et al. (2021) observe that business is declining, even in China, with export prohibitions introduced by more than 80 countries by April 24, 2020, as an immediate response to controlling the spread of the virus. The authors note that this decline is similar across international trade partners. Within China, the declining meat prices discussed by Ijaz et al. (2021) are consistent with Barlow et al. (2021)’s conclusions that China has witnessed declining business trends due to the pandemic. Arguments by Ijaz et al. (2021) are backed by the example provided by Shi et al. (2021). In this example, Shi and colleagues demonstrated that a decline or disruption in the supply chain in one country impacts another country. In other ...