Covid-19 shocking global value chains

The Covid-19 epidemic hit China in December 2019. Even before it turned into a pandemic, Covid-19 has strongly affected the world economy through global value chains. We use a quantitative trade model with input-output linkages to gauge the effects of the initial COVID19 shock in China on the global economy through international trade. Our approach allows us to isolate the role of global value chains from trade in final goods and to compare the effects to a hypothetical Covid-19 shock before China's WTO accession. We systematically investigate the predicted patterns in terms of countries' reliance on China and their position in global value chains.