Optimism Among German Executives over Chinese Economy

Executives at German companies operating in China have given an overwhelmingly positive assessment of both the current economic situation and future economic development in China. In the most recently conducted survey, the indicator for expected economic development over the next twelve months jumped from minus 3.5 points in the second quarter to 17.1 points. This is the highest result since the fourth quarter of 2013. These are the findings of the current ZEW-PwC China Economic Barometer, a survey carried out by the Centre for European Economic Research (ZEW), Mannheim, together with the accounting and consulting firm PricewaterhouseCoopers (PwC).

The assessment of the current economic situation in China also improved considerably, climbing from 5.8 points in the previous quarter to 27.1 points. 36 executives at German companies conducting business in China took part in the most recent survey for the ZEW-PwC China Economic Barometer in May 2017.

According to the survey, the executives currently believe that the economic situation is more likely to continue to improve than to worsen over the next twelve months. They currently rate the likelihood of the situation improving at 32 per cent, while the likelihood of the economy deteriorating is 20 per cent. “These figures, however, still express a certain uncertainty over future economic development in China that should not be underestimated,” says Dr. Michael Schröder, project leader and senior researcher in the ZEW Research Department “International Finance and Financial Management”.

China’s international shopping spree continues

Also witnessing a sharp increase in the most recent survey were the executives’ expectations regarding Chinese acquisitions of foreign companies, with the relevant indicator climbing from 37.5 points to 51.5 points. The assessment of Germany’s attractiveness as a target country for investment also improved and currently stands at 44.1 points. The surveyed executives still anticipate not only a general increase in the number of foreign companies being bought up by Chinese firms but also an increase in the number of acquisitions and shareholdings in German companies specifically. “China’s international shopping spree shows no signs of stopping,” says Thomas Heck, head of the China Business Group for Germany and Europe at PwC. “Small and medium-sized enterprises in Germany with their advanced technology are of particular strategic interest to Chinese companies.”

The assessment of the role of foreign trade in China’s economic development was also considerably higher in this most recent survey. Expectations regarding exports rose from minus 11.6 points to 9.1 points, while those regarding imports rocketed from minus 5.8 points to 29.4 points. “This shows that the executives anticipate an even stronger integration of China into the international trade of goods and services,” says Michael Schröder. Similarly to their general expectations regarding imports and exports, the experts’ expectations regarding China’s trade with Germany also saw an increase.