China restricts PPE exports just as Canada's supplies reach critical stage in COVID-19 fight

The fight against the COVID-19 pandemic in Canada has resulted in desperate calls by medical professionals about a critical shortage of personal protective equipment (PPEs) - a situation about to be exacerbated by the world’s largest manufacturer sharply restricting exports.

Canadian officials said they were notified on March 31 that China - which makes about 50% of the world’s face masks, medical goggles, protective gloves and other items - is now restricting exports of PPEs to those made by Chinese manufacturers that have proper certification by the national medical products registry. All such exports, according to the Chinese press release, will be checked at export customs in China to see if the proper paperwork is present.

“Today, the global pandemic continues to show signs of accelerating in its spreading trend,” said the statement from the Chinese Ministry of Commerce. “Based on the foundation of solidifying [China’s] own outbreak response, an orderly development of medical goods exports is an important part of deepening the global cooperative effort to deal with this public health crisis together.”

The export certification requirements extend to COVID-19 mainstays like ventilators and infrared thermometers and is active as of April 1.

Experts say that the move likely came as a response to news this week that countries like the Netherlands have recalled 600,000 defective masks made in China. Canada received a donation of supplies, including 30,000 masks and 10,000 goggles, from China on March 28, and officials have said the goods will be tested by Canadian health authorities on the necessary standards.

Nonetheless, the additional red tape, the required inspections at the point of export in China and - most importantly - the limited number of manufactures who have the Chinese national registry certification will all factor in to grind Chinese export of PPEs to Canada to a halt, one trade official working on the procurement process said.

“The first thing that jumped in my head was, was this an April Fool’s joke?” said Omar Allam, founder and CEO of trade consultancy Allam Advisory Group, who has been helping Ottawa secure PPE import procurements from Asian markets. “But then, the realization sets in that it really isn’t, and it is disappointing because there has been calls from the G20, the World Bank and the WHO, and these new restrictions on medical supply exports could not have come at a worse time.”

One of the main problem, Allam said, is that most of the Chinese manufacturers now approved for export are state-owned-enterprises (SOEs) whose capacity is limited and whose manufacturing processes are outdated. As such, he said it is very hard to imagine the current approved exporters can come close to satisfying global demand.

In addition, despite Beijing’s efforts in recent years to streamline western and Chinese medical goods manufacturing standards, it still takes about a year for a non-certified manufacturer to receive Chinese government certification - and that was before the COVID-19 crisis.

And even with Ottawa’s recent initiatives to kickstart Canadian PPE production, Allam said the reality is that the ramp-up does not cover the shortfall created by a shortage of Chinese imports.

“In spite of the herculean effort to increase domestic production, more imports are needed to meet the Canadian shortage of supply,” he said. “PPE demands across the provinces and territories are getting serious; lives are on the line.”

Allam said he understands that Beijing’s move likely carries some brand-protection elements; after the news of the Dutch recall, Chinese authorities are likely keen to boost quality-assurance efforts of its PPE exports to avoid further missteps.

But he added that - as the restrictions are currently - many qualified manufacturers in China cannot get their products to the West where the pandemic is now intensifying. Even alternative sources like Southeast Asia depend on Chinese parts for their PPE production, and the hold-up in China’s exports will ripple through the entire global supply chain.

The current malaise in Ottawa-Beijing relations stemming largely from the Meng Wanzhou case doesn’t help, Allam added.

“There’s a lack of trust in the Canada-China relationship,” he said, adding that he hopes Beijing will reconsider and loosen the export restrictions after the two sides have a more transparent conversation about PPE supply line realities in both markets. “… You can hide behind quality control, but let’s put the cards on the table to see what can and can’t be done in terms of matching supply an demand.”