As the world’s financial markets take direct hits from China’s developing financial crisis, Portugal is bracing itself for losses. Exports to China are currently worth “about a billion euros per year”, writes Sol online newspaper. These will be the first casualties. Then, there will be “fall out” from the drop in business between China and Germany, as the latter is the “motor” for the whole European economy.
As the news emerged, trillion euro losses were registered throughout European markets.
London lost €70 billion by early afternoon, reports noticiasaominuto, with “similar losses verified in Germany, Spain, France, Athens and even Portugal”.
Noticiasaominuto’s story claimed “difficulties in the largest Asian market are provoking financial collapse on a global scale”.
Not quite so alarmist, Sol set out a list of Portugal-based businesses most in the firing line.
Number one is car manufacturer Autoeuropa – the Palmela-based business set up in the 90s between Ford and Volkswagen, and responsible for almost two-thirds of all Portugal’s motor vehicle exports.
Autoeuropa has been doing increasing business in China. In 2011, the country had leapt from its 10th place as an Autoeuropa export destination to position number 5. By 2014, one in four cars made at the plant were sold to China – raising China’s ranking even further to position number 2, behind Germany.
As Autoeuropa ponders the change, the mining sector here, various industrial companies and the IKEA factories in Paços Ferreira will be next to suffer, writes Sol.
“But there is another mechanism of indirect transmission that could have an impact on Portugal”, the site continues, explaining that “China is the third largest destination for German exports”.
Again, it is the automobile industry that most benefits from this business relationship.
“The Chinese are among the world’s main buyers of Volkswagen, Mercedes, BMW and Audi”.
Economic upheaval in Peking could impact on the German export market, which opened with losses of 4% this morning.
Sol concludes: “As Germany is the motor of the European economy, any impact from China would have effects on other economies that supply goods and services to Germany. This is the case of Portugal and other smaller European economies that are very dependent on Germany. Germany is the 3rd largest destination for national exports”.
Photo: Palmela-based Autoeuropa has been doing increasing business in China
Photo by: MARIO CRUZ/LUSA