MILAN, Feb. 27 (Class Editori) - More than a half of the European companies in China are expecting a fall in their turnover by 20 percent in the first quarter of this year due to coronavirus epidemic. Another strong impact after the kickbacks of the trade dispute between the USA and the People’s Republic of China. At least six out of 10 of the 600 firms which have participated in the survey of the European Chamber of Commerce in China have declared that they have been strongly affected by the crisis. Therefore, they are asking for well-balanced measures to foster a new stability of the goods and services demand.
Of course, industrial sectors are those mostly hit, compared to the service sectors (17 percent) which can more easily rely on remote working. However, half of the service companies are facing difficulties related to the cash flow.
In general terms, enterprises are suffering from a drop in demand. Almost half of those which have participated in the survey have also underlined difficulties in respecting deadlines, because of logistics problems as well as lack of manpower.
China has implemented "sound mechanisms to cope with the crisis", as Joerg Wuttke, the President of the UE Chamber of Commerce has stated. However, according to the German manager, it will be difficult for Beijing to retake the same measures implemented to overcome the global financial crisis of 2009, namely investing billions of dollars in infrastructure projects, a strategy which has consented Beijing to avoid problems, but it has increased the indebtedness rate.
Global indebtedness rate, as also disclosed by the SACE risk map, is one of the major threats of the global economy. The amount has reached 253,000 U.S. dollars in the third quarter of 2019 (over 3.6 percent in comparison with the end of 2018), with an impact standing at 322.2 percent of the global GDP. "The indebtedness rate of the emerging economies is less than one third of the total amount, however in the last decade a strong growth has been recorded (over 147 percent), together with a significant increase of the impact on the GDP", as the credit insurance and export support company of the CDP Group has underlined. "In this scenario, the world GDP is expected to raise up to 2.3 percent in 2020, at a slower pace compared to the previous year. Important economies, both advanced (France, Germany, Japan, and USA) and emerging (China) ones, will be expected to slow down. These are the economies towards which the major part of the Made in Italy products is addressed. Some positive signs are resulting from recovering (among the others, Saudi Arabia, Brazil and Russia) and growing economies (Colombia, Philippines and Morocco)."
Many demands for support have arrived from the EU enterprises two months after the epidemic outbreak. Suspension of tax deadlines, short-term credit extension, reduction of bills and administrative expenses are included.
However, it is feared that the epidemic and the trade dispute with the USA may have affected the companies' trust in the People's Republic of China. The companies "have put diversification at the top of their agenda because they are concerned of becoming too much dependent on China", according to the report associated to the survey. For this reason, keeping acting on reforms and market openness is required.
(Source:Class Editori)
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