The Covid-19 pandemic and geopolitical uncertainties and instability are causing more risks for Chinese companies’ overseas investments, according to the Handbook of Country Risk 2021. The annual report was issued by the China Export and Credit Insurance Corporation (Sinosure). First launched in 2005, the report has served as a reference for Chinese companies seeking to invest overseas. According to the report, global political risks are unlikely to be reduced quickly in 2022, with conflicts and confrontations in some regions persisting or intensifying, which could lead to a rise in global risk levels. Moreover, the world’s economy is experiencing difficulty recovering from the pandemic. The report predicts that global economic growth will reach 4.7% in 2022, down one percentage point from 2021, and may fall to 3.3% in 2023.
“Only about 60% of countries recovered to their pre-pandemic economic levels in 2021, and about 20% are not expected to recover to that level even in 2022,” said Yin Yanhui, Assistant President of Sinosure. As the world economy has yet to fully recover in 2021, the report stated that global debt will remain at a high level, and the ratio of public debt to GDP is expected to exceed 100% in 2022. Developed countries such as the U.S. and those in Europe are expected to see substantial improvement in their fiscal situations, with reduced financing needs and a steady decline in their debt burden. However, emerging economies will continue to run large fiscal deficits, face financing pressures and rising debt burdens.
Tian Dewen, Deputy Director of the Institute of European Studies at the Chinese Academy of Social Sciences, said profound changes are taking place in the global arena and different epidemic prevention and control policies could bring different prospects for economic recovery and country risks. Chinese companies need to fully understand a country’s political and economic situation before making overseas investment decisions, as reported by the China Daily.
