ZEW-PwC China Economic Barometer Q1 2015 - German Managers Little Satisfied With Chinese Measures Against Cyber-Crime

Only one out of ten German managers in China thinks that Chinese laws and institutional structures protect their companies against cyber-attacks. About 60 per cent of the executives in China believe that protection against cyber-crime is “poor” or even “very poor”. This is the result of a special survey by the ZEW-PwC China Economic Barometer in the first quarter of 2015. The survey asks German companies in China about the situation and development of the Chinese real economy on a quarterly basis. The concrete danger of worldwide cyber-crime is actually demonstrated by the example of Sony Pictures. The company has recently become the victim of a spectacular cyber-attack.

The experience of a cyber-attack has obviously significant influence on the evaluation of future risks: 60 per cent of the managers whose companies were already attacked in the past (about one out of four) believe that a new attack within the next twelve months is highly possible. This percentage is more than three times higher than the comparative figure for managers not being-attacked till now (tightly under 20 per cent). The managers estimate the quality of Chinese state measures against cyber-crime as low as in Russia or India, far behind industrial countries such as Japan or the USA.

Exchange rate adjustments of the renminbi could improve economic relations with China

The attitude towards the economic relationship of German companies with China is much better than towards the cyber-crime issue. The percentage of managers assuming that the commercial activities of German companies will slightly increase within the next six months grew from 50 per cent in the last quarter of 2014 to almost 60 per cent now. Besides, more than half of the managers expect an increasing volume of German exports to China within the next six months. Germany’s role as a target country for Chinese direct investments will continue to increase. An important factor for this fact is the progressing liberalisation of the Chinese financial sector and, therefore, also of the exchange rate of the yuan. “The renminbi is structurally still undervalued compared to the euro and the US dollar. Further gradual deregulation of the exchange rate will lead to a perceptible revaluation of the Chinese currency,” says ZEW economist Oliver Lerbs about the situation. Actually, more than 70 per cent of the managers currently believe that a perceptible market-based development of the renminbi exchange rate is possible within the next three years. A year ago, only 41 per cent of the interviewees shared this opinion.

Economic development in China: uncertainty grows

There is a rising uncertainty about the direction the Chinese economy will follow in 2015. The managers put the chance to 30 per cent that the overall economic development will decrease considerably during the next 12 months, whereas they estimate a perceptible increase at only 25 per cent (see figure). “The recently released Chinese growth numbers did not surprise, but they may have contributed to the rising uncertainty,” comments Jens-Peter Otto, partner and China expert at PwC. “We advise the companies to be prepared for further decreasing growth rates in China. However, we expect that this development will be regulated actively by the Chinese government.”

This survey for the ZEW-PwC China Economic Barometer in the 1st quarter of 2015 was conducted between January 5th and January 19th, 2015. Fifty-two senior executives from German companies in China took part.

Contact

Dr. Oliver Lerbs, phone +49 (0)621/1235-147, e-mail: lerbs@zew.de

Prof. Dr. Michael Schroeder, phone +49 (0)621/1235-140, e-mail: schroeder@zew.de