Issue Five 2009
While China’s GDP growth reportedly accelerated to 7.9% in the second quarter of 2009, an improvement on the 6.1% growth seen in the first quarter, it is clear that challenges remain – particularly in the area of trade. As an export-driven economy, China’s trade levels are continuing to suffer in the context of the global downturn, with July 2009 figures reporting that the country’s exports had dropped 23% year-on-year.
Although levels of trade have clearly seen a negative impact as a result of the financial crisis, the challenging economic environment has led to a significant increase in companies’ awareness of counterparty risk, which is certainly a positive move for China’s corporate risk culture. The need to consider risks in a trading relationship is more critical than ever and in this issue’s Treasury Practice article we look in detail at the principles of trade finance, its tools and techniques and specific considerations for corporates operating in the China market.
Moving money into and out of China can be another major challenge for foreign invested enterprises (FIEs), and in our China Focus article we explore some of the options open to corporates. We also consider the tax implications of some types of payments and explain how the method for calculating withholding tax has recently changed.
Meanwhile, with every business looking to optimise its operations and cut costs wherever possible, this issue’s Question Answered looks at the best ways for a company to streamline its supply chain and the challenges associated with improving process efficiency.
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