GENEVA – A former Chinese diplomat took center stage Tuesday at the World Trade Organization, announcing its revised prediction for a 9.2% percent decline in world merchandise trade this year and cautioning that a further hit could await if the coronavirus continues to spread.
Deputy Director-General Yi Xiaozhun's presentation of the new WTO forecast symbolized a coming-of-age moment for China not yet a generation after it acceded to the trade body. It comes amid a punishing U.S. trade war against China under President Donald Trump, who has repeatedly accused the country of unfair trade practices and intellectual property theft.
WTO officials are required to serve the Geneva trade body, not their national interests. But the presentation by a former Chinese diplomat - Yi previously served as China's ambassador to the WTO - could resonate for a U.S. administration that has been withering in its criticism of the Communist government that oversees the No. 2 world economy.
Yi announced that WTO economists have revised to a 9.2% drop in merchandise trade this year, down from their earlier prediction of a 12.9% plunge . That forecast was presented in April, when COVID-19 case counts were soaring in major economic engines like the Europe Union and the United States.
The revision follows better trade performances in June and July, notably thanks to rising demand for health care goods and electronic equipment. WTO now also predicts a 7.2% rise in trade next year, far more “pessimistic” than the April forecast for a 21.3% bounce-back. The forecasts exclude trade in services, and focus only on merchandise.
“The COVID-19 pandemic is above all a public health crisis, and preventing further suffering is the WTO’s overriding concern,” Yi said. “However, the outbreak has also disrupted the global economy in unprecedented ways.”
Health measures initiated to battle the pandemic have hit many service sectors that require “in-person interactions,” but such measures “saved many lives” despite the economic costs, he added. Yi specializes in economic research and statistics at WTO.
“Relatively fast action in many countries to provide fiscal and monetary support has helped mitigate some of the negative economic effects,” Yi said. “The net result has been a deeper but less prolonged decline in trade, although considerable uncertainty remains about the strength of any recovery going forward.”
He said this year’s trade slump would accompany a drop in GDP of 4.8%, followed by a 4.9% jump next year.
“A resurgence of COVID-19 requiring new lockdowns could reduce global GDP growth by two to three percentage points, and shave up to four percentage points off of merchandise trade growth in 2021,” he said.
Yi pointed to “some limited upside potential” if effective vaccines or other medical treatments can be made available quickly.
Yi is one of four WTO deputy directors-general along with others from Germany, Nigeria and the United States. Former WTO Director-General Roberto Azevedo left the job in August, nearly a year ahead of schedule, and five remaining candidates are vying to succeed him in a process likely to be completed in coming weeks.
Yi has spoken publicly in his role, but had never previously led a WTO news conference, according to the trade body's press office.