China CFOs Unnerved by Geopolitical Uncertainty, Detrimental Policies

While CFOs in China have become more optimistic about the economic outlook, one-third of them have expressed pessimism because of the fast-moving and unpredictable development of global geopolitical events, according to the latest CFO Survey by Deloitte.

This survey—conducted from February to March 2018—received 138 valid responses, Deloitte said.

"China's economic resilience, underpinned further by new governmental strategic measures such as the Belt and Road Initiative and 'BRIC Plus', has boosted market confidence towards the business outlook," said Sitao Xu, Chief Economist of Deloitte China. “However, CFOs seem to be unsettled about the increase in trade tension, with 14% of them citing trade protectionism as one of the potentially high impact risk factors.”

"Detrimental government policy/regulation" remains the dominant risk factor in the eyes of CFOs, who were also unnerved by the stronger likelihood of the rise in capital costs as a result of the anticipated U.S. interest rate hike, survey results indicate.

Meanwhile, receding anxiety towards geopolitical issues among CFOs may have contributed to the overall optimism in economic outlook, as only 9% of survey respondents indicated this as an important risk factor, versus 23% from the previous survey done in Q3 2017.

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