German firms in China do not expect business to recover until 2021

The trial of two former French spies suspected of sharing secrets with China opened in a Paris criminal court Monday, behind closed doors for reasons of national security.

German companies in China do not expect business to return to pre-pandemic levels until next year, according to an advocacy paper published on Wednesday by the German Chamber of Commerce in China.

The paper, based on input from over 70 German business leaders in China, found that hopes for a turn-around point in mid-2020 had dissipated, and more than half of the firms surveyed said they expect double-digit drops in sales in 2020.

Although nearly three-quarters of the surveyed firms foresaw some recovery in production capabilities, uncertainty remains high – particularly regarding demand and sales, which have yet to fully pick up.

Respondents cited international travel restrictions and cash flow shortages as the biggest challenges they are currently facing.

“COVID-19 is posing new challenges and at the same time accelerating trends that have been on the advocacy agenda before, such as investment conditions, internet access, and access to local financing.” said Yasmine Riechers, the chamber’s vice chairwoman of the board for northern China.

Business leaders also said they were concerned about decoupling trends that have seen the U.S. and other countries divest from China and untangle their economies, and the possible implications on supply chains and research and development this could have.

“As the second-largest economy in the world, tightly interlinked with international supply chains, China holds a key role in leading the way back to global economic strength after COVID-19,” said Clas Neumann, the chamber’s chairman of the board in Shanghai.

Mr Neumann noted that “German companies are generally committed to the Chinese market.”

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