German Executives in China Cautiously Optimistic About the Economic Situation

At the start of 2017 executives at German companies in China are looking to the future with renewed optimism. Forecasts for the Chinese economy over the next twelve months have continued to improve slightly. The expected economic growth rate has jumped by 0.5 up to 1.6 points, much higher than the previous average of -5.1 points from when the survey began in the third quarter of 2013. These are the findings of the current ZEW-PwC China Economic Barometer, a survey carried out by the Mannheim-based Centre for European Economic Research (ZEW) together with the accounting and consulting firm PricewaterhouseCoopers (PwC). 31 executives at German companies in China took part in the survey in December 2016.

According to the executives, there is a likelihood of 25 per cent that the economic situation in China will continue to improve in 2017. This number was the same for the fourth quarter of 2016. However, the likelihood of a further deterioration sunk from 33 per cent in the previous quarter to 29 per cent in the first quarter of 2017. These slightly brighter economic forecasts at the end of 2016 continue into the new year.<o:p></o:p>

According to those surveyed, Chinese government expenditure will continue to exert a significant influence over the economy in 2017. "One of the consequences of this could be a further increase in the Chinese government's debt," says Dr Michael Schröder, scientific head of the ZEW-PwC China Economic Barometer. In terms of the various sectors, household-related industries in particular – such as the service, information and communication and consumption sectors – are viewed favourably, as are the electronic and automobile industries.<o:p></o:p>

China's emerging start-up scene<o:p></o:p>

The respondents were also asked in a special question whether they thought China would be able to improve its international standing in the field of digitalisation. More than half (55.6 per cent) of the German executives surveyed predicted that the Chinese start-up scene would prove itself capable of competing at an international level within the digital technologies sector within the next five years.<o:p></o:p>

"Start-ups are playing an increasingly important role in new innovations in China. In many sectors these start-ups are catching up or have even overtaken Western firms, particularly in terms of mobile payment systems," says Thomas Heck, head of PwC's China Business Group. "In big cities like Beijing and Shanghai co-working spaces and investor pitches have long since become the new norm." This sector in Germany is, however, still currently considered to be more efficient. The surveyed executives also expect China to gain ground as a competitor to Silicon Valley over the course of the next five years.<o:p></o:p>

For further information please contact:<o:p></o:p>

Dr. Michael Schröder, Phone: (+49)0621/1235-368, E-mail schroeder@zew.de <o:p></o:p>