The Impact of Coronavirus on Georgia-China Trade

The coronavirus outbreak in China and beyond its borders is having an impact on the country’s foreign trade, including with Georgia.

The dangerous virus that has now spread to at least 27 countries and territories outside mainland China, has left around 60 million people under lockdown in Chinese cities as international researchers race to develop a vaccine and halt its spread. The standstill prevents people from going to work, and thus the production of a number of Chinese products has been suspended for an unknown period of time.

The economic impact of the virus is still impossible to determine, but economists think that China's growth rate could drop two percentage points this quarter. It is also predicted that such decline could mean $62 billion in lost growth.

Within the framework of preventive measures for the spread of coronavirus in Georgia, direct flights to the People's Republic of China have been suspended until March 29.

Within the same precautionary measures, all airlines operating in Georgia have been informed about transit passengers whose journeys originated in the People's Republic of China, the Civil Aviation Agency reported.

Georgian economists are expecting a decline in the flow of tourists due to air travel restrictions, and tens of thousands of dollars in losses in the sector. 48,071 visitors from China entered Georgia in 2019, which is 50.9% more than in the previous year. On average, Chinese citizens spent GEL 2253 ($778.24) on one visit to Georgia, which makes Chinese tourists the seventh highest-paid tourists for Georgia. If the flight restrictions continue due to the virus, Georgian tourism could face a real challenge.

Health Minister Ekaterine Tikaradze advised Georgian citizens not to travel to China, noting that such recommendations came for the purpose of citizen safety, and that all possible prevention measures had been activated in Georgia to prevent the spread of coronavirus.

A further measure saw imports of live animals from the People's Republic of China banned from entering the territory of Georgia. The Ministry of Environment and Agriculture reports that the ban was imposed after the World Health Organization (WHO) and the World Organization for Animal Health (OIE), called for the suspension of wild animal trade with China.

“The decision was made by the Main Division of Market Supervision of the Ministry of Agriculture and Forestry of the People's Republic of China on January 26, 2020, prohibiting the trade of live animals or wild animals in any form,” the statement said.

The Ministry added that decorative tortoises and ornamental fish were often imported from China to Georgia, but both have now been prohibited for an undetermined period of time.

The Ministry added that the import of other Chinese products will not be tightened as it does not carry any risks of virus transmission.

National Statistics Office (Geostat) official data reads that Georgia exported $227.6 million worth of products to China in 2019. In 2018, the figure was $198 million, and in 2017, before the Georgia-China free trade regime entered into force, exports to China totaled $201 million.

In 2019, exports from Georgia to China increased by 12.4% to $3.8 billion, while imports decreased by 0.8% and amounted to $9.1 billion. China ranks 6th in Georgia's top 10 export markets, which clearly shows the possible impact the virus could bring to mutual trade between the two countries.

The top 10 products exported to China from Georgia are:

1. Copper ores and concentrates: $172.2 million;

2. Natural grape wines: $18.8 million;

3. Equipment for use in medicine or veterinary medicine: $12.9 million;

4. Ores and concentrates: $5.7 million;

5. Spices: $3.6 million;

6. Nuts: $3.4 million;

7. Diagnostic or Laboratory Reagents: $2.7 million;

8. Orthopedic and Artificial Body Parts: $2.02 million;

9. Non-denatured ethyl alcohol, alcoholic beverages: $839.7 thousand;

10. Aluminum Crude: $779.1 thousand;

As the virus continues to spread at high-speed, it is hard to estimate its real impact on Georgia-China trade; however, taken the current global situation in and outside China, it is obvious that negative consequences will be impossible to avoid.

By Tea Mariamidze

Image source: Allmedia News