China’s Role in Malaysia’s Export Recovery in Covid Times

Abstract

International trade plays an important role in Malaysia’s economy and growth performance. The emergence of the coronavirus disease in 2019 (Covid-19) and declared a pandemic at the beginning of 2020 has led to an unprecedented economic crisis in Malaysia, as in most other countries. As the number of Covid cases increased after the first case was discovered in January 2020, the government implemented different degrees of Movement Control Orders (MCO) from 18th March till the current day at the point of writing this paper. The lockdown in Malaysia as well as many other countries led to supply and demand shocks, which has in turn affected the country’s cross border trade. Exports dropped continuously in the first five months of 2020 before recovering. The purpose of this article is to identify the key trade partners that contributed towards Malaysia’s export recovery in 2020, especially the role of China given the fact that it is Malaysia’s largest trading partner since 2010. Specifically, it examines how economic recovery in the major trade partners are correlated with Malaysia’s export recovery as well as the causal relationship underpinning the export recovery in 2020. The study shows that trade recovery in the midst of the COVID-19 pandemic goes beyond domestic policy and production measures. Economic recovery in partner countries played a role too.