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An end to the pandemic is in sight and China is expected to achieve herd immunity (80%) by the end of the year. However, it is not known yet how effective the vaccine is and whether it is also effective against other variants of the virus. For this reason, the government has restricted the distribution of passports to Chinese and continues to be very strict about the occurrence of new cases. Due to the no-case strategy being followed and the uncertainty about the effectiveness of the vaccine, it is expected that the strict quarantine measures and visa restrictions will continue for at least another year, more likely even longer. The travel restrictions and the planned withdrawal of tax benefits for foreign workers are putting pressure on German companies in China.
In particular, political interventions in the economy (there have been a few examples of this in recent weeks) could lead to a restraint in further investment and innovation. Due to the political decoupling and the focus on the domestic market (5-year plan), a stronger localisation is to be expected.
KPMG China Newsletter - September 2021
Current topics of the issue:
- China Economic Monitor Q2 2021
- Competing with China
- Inclusive Framework BEPS Agreement
- China-Europe trade: Sea freight
- The 14th Five-Year Plan
- Selected recent event in China, observed by Andreas Feege