The latest edition of Deloitte's survey of Chief Financial Officers (CFOs) at Chinese firms reveals a sharp drop in sentiment.

HONG KONG, CHINA - Media OutReach - December19, 2018 - According to the 2018Q3 survey, 82 percent of the CFOs are less optimistic about economic prospectsthan they were six months ago--a 52 percentage point increase from six monthsearlier--with rising trade protectionism seen as biggest risk. As far as theirown businesses are concerned, more than half the CFOs surveyed (56 percent) saythey have already been hit by trade tariffs, and only 38% expect to meet theirrevenue targets.

"There hasbeen a sharp shift in sentiment," says William Chou, National ManagingPartner of Deloitte China CFO Program. "The bright spots of six monthsago, including several economies that were doing better than expected, havefaded. It's no surprise sentiment among Chinese CFOs has declined given goodsflow between China and the US have borne the brunt of trade measures."

The ongoing tradewar and the prospect of economic turmoil (27 percent of respondents cited thisas the second biggest area of concern) have even managed to put technology tothe back of Chinese CFOs' minds. Not one of the surveyed CFOs views disruptivetechnologies as a concern, down from 10 percent in Deloitte's Q1 survey.

"With noimmediate agreement for tariffs, Chinese stock markets struggling, and theprospect of pressure from government policies, it looks like CFOs are right tobe negative. However, China and the U.S. are striving to resolve their tradeissues. If they can eventually reach an agreement, business sentiment willquickly improve," adds Chou.

The survey bringsbrighter news for economies in Southeast Asia, which was picked by 53 percentof CFOs as the country or region best placed to benefit from Sino-US tradetensions.

"Tradetensions between the US and China aren't going to do either of them muchgood," says Jens Ewert, Deloitte China CFO Program MNC Sector Leader."With 58 percent of respondents saying China is going to see the biggestdrop in export volume, and 28 percent picking the US, it's hard to avoid theconclusion that the ongoing trade tussle is a lose-lose situation for the twomain protagonists."   

As one of the key initiatives of Deloitte China CFOProgram, the Deloitte China CFO Survey is conducted every six months as atemperature check of business and economic sentiment and a source of insightson burning business issues and challenges. The latest survey was conductedbetween September and November this year, with 108 responses from seniorcorporate executives.

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