Guangdong’s Pearl River Delta, a business hub known as the “factory of the world”, has largely returned to normal after experiencing the chaos brought by the epidemic. But global demand for goods is falling, with 70 percent of business activity in 29 major countries and territories “contracting.” Affected by the end of the epidemic, the focus of consumption has shifted from goods to services…

Global demand for commodities is falling. According to the business sentiment index of the manufacturing industry, 70 percent of companies in 29 major countries and regions reported a contraction in their business activities. Due to the end of the COVID-19 pandemic, the focus of consumption has shifted from goods to services, while monetary tightening in advanced countries and sluggish domestic demand in China are having a negative impact. Because of the lack of demand, the lifting of supply constraints has not turned into an easterly wind. The focus will be on whether services can support the broader economy.

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The Pearl River Delta region in South China’s Guangdong province, known as the “factory of the world,” has largely returned to normal after experiencing chaos caused by the COVID-19 pandemic. For example, container ships are stuck in port waiting to be unloaded. It swelled to more than 70 at its peak in March 2022, according to financial information company Refinitiv, but has only been around 20 recently.

Data from the Japan Maritime Center show that the volume of maritime container traffic from Asia to the United States has decreased by 2-3 percent year-on-year since 2023. There are voices in the industry that “although there is a sales demand, it cannot eliminate the excess inventory of retail, and it is not strong enough to require new production and transportation” (large container ship companies).

Supply chain constraints that put inflationary pressure on the world have largely been lifted. Due to changes in China’s epidemic prevention measures, economic activities have normalized, and the impact is obvious. For the manufacturing industry, it helps to improve production processes such as parts procurement. However, supply chain normalization is not being fully utilized. This is because there is insufficient actual demand.