China's Outlook

Red Dragon Down

lights reflected in a puddle Bloomberg
A drop in optimism in China – and its trading partners.
  • Why it matters

    Why it matters

    After France, China is Germany’s most important trading partner – 7 percent of all German exports go there – meaning the slowdown will affect Germany too.

  • Facts

    Facts

    • A new study predicts 300,000 companies will go under because of China’s declining economy.
    • German companies will not only be hit by China’s troubles, but also by effects of the Volkswagen crisis.
    • Overall, though, German businesses are mostly on firm ground after market adjustments in recent years, according to Paris-based credit insurer Euler Hermes.
  • Audio

    Audio

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Bad news for entrepreneurs: The number of commercial bankruptcies around the world could increase or remain level in 2016. It would mark the first time after six years that the rate of insolvencies hasn’t declined.

That is the conclusion of experts from the credit insurer Euler Hermes in a study provided to Handelsblatt which predicts 300,000 companies will go bankrupt around the world. Germany’s export-reliant companies will be among the first to feel the crunch.

The reason is China’s economic downturn, which could lead to a dramatic rise in bankruptcies in the Asian powerhouse. The pace of China’s economic growth has dropped and the country is struggling to meet its target for 2015 of 7 percent. The economy is expected to grow at the slowest rate in the past 25 years.

“(China) has experienced a change of heart in its previous clear commitment to developing into a service-oriented society,” explained Ludovic Subran, chief economist at the Paris-based Euler Hermes.

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