Trade Conflict and Market Barriers: German Companies Suffering from China's Malaise

              Tuesday, November 12, 2019

              As a result of the trade dispute with the US, the Chinese economy is growing weaker than it used to be – and this too in the coming year. Three quarters of German companies in China will miss their targets. In addition, a further difficult market access.
              The weakening economy in China has a significant impact on the business of local German companies. "The expectations of German companies are as low as they have been in years," said the German Chambers of Commerce (AHK) in Beijing on the occasion of the publication of their annual member survey on the business climate. Accordingly, only a quarter of German companies still expect to achieve their business goals in the People's Republic this year. Hang Seng Index 27,042.21 Especially in the automotive and mechanical engineering sectors – the traditionally strong sectors of the German economy – forecasts have declined significantly. The mood of companies suffering from the slowing Chinese economy coupled with the effects of the trade conflict, the Chamber said. Thus, 83 percent of German companies feel directly or indirectly affected by the trade war between China and the US. Weakening is a continuing trendAlso for the coming year only tentative signs of a recovery can be identified. "2020 is likely to be shaped by the uncertainties surrounding the trade conflict and the slowdown in global and Chinese economic growth," said Jens Hildebrandt, executive board member of the German Chamber of Commerce in Beijing. China remains an important market for the companies surveyed offer valuable business opportunities. However, market access restrictions and complex regulatory frameworks continue to limit the growth potential of German companies in China. Indirect restrictions, such as licensing, disproportionate tendering, lack of participation in the development of industry standards, and insufficient lead times in implementing new rules, are among the largest Hurdles for German Companies Demanding Investment AgreementsFor every second respondent, legal uncertainty and the diffuse legal framework as well as technology transfer were the most significant challenges in China's business. The Chamber appealed for the conclusion of a comprehensive investment agreement between the EU and China. An agreement that includes fair market access would provide new impetus and "take German-Chinese economic relations to a new level," Hildebrandt said. China's economic growth is slowing, with the 6.0% growth rate so low in the third quarter of the year as in almost three decades no more. Experts cited the US trade war with China, uncertainty among investors, and China's efforts to tackle growing debt as causes. Slower growth in the United States and China as a result of the trade war between the two largest economies is slowing down the global economy and worsening prospects for growth Germany. However, Beijing and Washington have recently signaled that they want to sign an agreement to ease the conflict.

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