Bad news for Mercedes-Benz, Covestro & Co: China is no longer growing

Bad news for Mercedes-Benz, Covestro & Co: China is no longer growing

Bad news for DAX companies that are very active in China, such as Mercedes-Benz or Covesro: Against the backdrop of strong corona measures, China’s economic growth fell sharply in the second quarter. Compared to the same period last year, the second largest economy grew by only 0.4 percent.

Experts polled by the Bloomberg news agency expected a higher growth of 1.2 percent. It is the weakest quarterly growth since the start of the corona epidemic. In the first quarter, the economy grew by 4.8 percent. This resulted in an overall growth of 2.5 percent for the first half of the year.

The economy is suffering from the fact that Beijing does not want to abandon its strict “zero corona” policy. The purpose of this is to nip any breakouts in the bud. Many cities in China had imposed strict corona measures, especially in the spring, to prevent the spread of the highly contagious omicron variant.

Shanghai, China’s most important economic hub, had to spend two months in a strict lockdown in April and May, which affected the economy greatly. The capital’s port, the most important shipping center in trade with China, operated on a limited scale.

“The middle class feels”

“The middle class is increasingly feeling the effects, for example through stagnant incomes or falling real estate prices. This increases the political pressure on the government to find a solution,” commented Max Zenglein from the China Merics Institute in Berlin. Continued weak growth also exacerbates existing problems in the financial system. Without major changes, an increase in payment defaults is expected in the coming months. “The most appropriate stimulus package for the government would be to move away from the zero-covid strategy,” Zenglein said. But no one in China expects that.

Only a few infections can still lead to an entire district being locked down, as happened again last week in the Chinese capital Xi’an. Infections are also being found regularly in Beijing, Shanghai and the southern Chinese capital of Shenzhen, the three most important economic centers, which lead to renewed restrictions.

According to economists, the strong export figures in June, which China had already presented on Wednesday, should not be taken as clear. Part of the reason for the 17.9 percent increase was that business caught up after Shanghai was allowed to reopen in late May. Weak import growth of just 1 percent raised concerns, pointing to a lack of appetite among Chinese consumers.

If economic weakness in China proves to be sustainable, this will undoubtedly be a problem for Mercedes-Benz, Covestro & Co. At Covestro, due to the difficult situation surrounding concerns about gas supply and the development of the world economy, no acquisition can be avoided. Investors who have already invested remember to stop at EUR 30.00. Here you can find out what is important in Mercedes-Benz.

Mercedes Benz
(WKN: 710000)

Notice of conflicts of interest: The CEO and majority owner of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has taken direct and indirect positions on the following financial instruments mentioned in the publication or related items that may benefit from the price promotion resulting from the publication: Mercedes-Benz.

With material from dpa-AFX