BOFIT Viikkokatsaus / BOFIT Weekly Review 2020/10

The chambers of commerce in China for the US, UK and EU all published at the end of February the results of their member surveys made about a week earlier. All surveys found foreign firms operating in China suffering from problems caused by the coronavirus epidemic. These included restrictions on travel and logistical problems, increased costs, reduced productivity, financing issues, as well as restricted supply of intermediate goods and diminished demand for finished products.

Not only do firms expect significant economic losses in the first half of this year, but huge uncertainty still overshadows the rest of the year. Uncertainty has forced companies to postpone their investment decisions and other planned operations. Many companies have had to cut costs and revise their budgets for this year. Most companies have also shifted extensively to telecommuting, which has increase the need for IT support.

To ease the situation, the bulk of foreign companies operating in China would like to see Chinese government support such as tax incentives. Foreign companies further stress the importance of clear, consistent and transparent policies in China. Many foreign companies have supported Chinese organisations in their fight against the coronavirus by providing charitable donations, technical support and medical supplies. American companies also wish having the US relax its heightened entry restrictions imposed on travellers from China to the US.

Two weeks ago, about half of companies surveyed expected the situation to normalise by the end of March.

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