Western Companies "Hit by China's Economic Downturn... Recovery in the Second Half Also Unlikely"

US Semiconductor, UK Apparel, and German Chemical Companies All Cite "Weak Demand in China"

Western companies have warned of a slowdown in earnings due to China's economic downturn and the impact on the global economy. These companies also predicted that China's economic recovery would remain elusive in the second half of the year.

On the 27th (local time), major foreign media analyzed business reports from global companies and found that Western companies across all sectors, including automotive, chemical, healthcare, and travel, expressed significant concerns in their reports as China's economic recovery fell short of expectations despite the lifting of COVID-19 lockdowns at the end of last year.

Joel Smeikal, CEO of U.S. semiconductor company Vishay Intertechnology, lamented, "Demand in China is sluggish." Jose Neves, CEO of UK luxury clothing shopping mall Farfetch, assessed, "The recovery is not explosive as everyone thought." Mike McMullen, CEO of global solutions developer Agilent, also cited the decline in business in China as a major reason for the drop in second-quarter sales and lowered the annual growth forecast.

China's economy is accelerating instability due to weak domestic demand and employment, declining exports, and defaults by real estate developers. In the second quarter of this year, China's gross domestic product (GDP) grew by 0.8% compared to the previous quarter, slowing from 2.2% in the first quarter. As concerns about a recession grew, the Chinese government introduced stimulus measures, and the central bank, the People's Bank of China, cut the benchmark interest rate by 0.1 percentage points this month. However, these measures were widely criticized as mere stopgap solutions insufficient to revive the cooling economic engine.

As China's economic indicators worsen and the government is reluctant to deploy large-scale stimulus measures, Western companies generally believe that confirming an economic recovery in China in the second half of the year will be difficult.

Martin Brudermuller, CEO of German chemical company BASF, diagnosed, "Chinese people spend a lot of money on their children's education, and the youth unemployment rate reaches 20%. They are cautious about consumer spending." He added, "There will be no recovery in the second half of the year," and analyzed, "Chinese people are neither satisfied with their government nor confident." Markus Steilemann, CEO of another German chemical company Covestro, also predicted, "We do not expect a rapid recovery in China in the second half."

Glen Fogel, CEO of travel agency Booking Holdings, said, "Production in China is still not high," and added, "For the time being, probably for a considerable period, we do not expect a recovery in China."

However, some companies like Apple and Starbucks, which have escaped the effects of China's sluggish economic recovery, were also reported by foreign media.

Chi Wang, Chief Investment Officer (CIO) of Megatrust Investment, specializing in mainland China stock investments, analyzed, "I cannot even remember a time when consumer, real estate, and corporate sentiment were this weak (as now). This is not simply a cyclical economic issue. It appears to be a structural problem."

This content was produced with the assistance of AI translation services.