China Export Credit Insurance Corporation (Sinosure) Releases the National Risk Analysis Report for 2020

by Axton Global
On November 12, China Export & Credit Insurance Corporation released the 2020 National Risk Analysis Report in Beijing, and released an intuitive and vivid global view of national risks. The "Report" is issued by the China Credit Insurance Corporation to provide comprehensive policy-based financial services for Chinese exports of goods, services, capital and technology.

It also supports Chinese enterprises while urging them to "go global." In addition, the report provides useful reference and guidance for the management and control of foreign trade and investment risks. Since it is the first official release since December 8, 2005, this is the 16th consecutive year that Sinosure has released the "Report."

Why is it important for Buyers importing goods from China?
This Report shows the significant role Sinosure plays in Chinese export ecosystem, showing us that this is a lot more than a simple insurance company that provides trade credit insurance facilities "on-demand". It truly is a game-changer, that defines country`s policy regarding credit and political risks and provides strong and proactive support for international trade between Chinese enterprises and overseas buyers.

Needless to say, Sinosure provides a strong base that can help you start a successful business with China, especially during the post-pandemic era.
Global country Risks may Continue to Rise
According to the "Report", China Credit Insurance's internal assessment of national risk levels and sovereign credit risk levels in 2020, a total of 61 countries have high-risk levels, 93 have medium risk levels, and 38 countries have low-risk levels.

Around 32 countries have high sovereign credit risk levels, 83 countries are medium, 60 countries are low, and 17 countries have risk events.

Since the global pandemic, the world's geopolitical turmoil has intensified and global political stability has declined. The trend of globalization has undergone new changes. Plus, the fragility of industrial and supply chains under the pandemic has caused major developed countries in Europe and the United States to further promote the "return of manufacturing" and industrial chain adjustments.

At the same time, in the context of the world economic recession, intensified international trade frictions, and fierce industry competition, the risk of corporate bankruptcy has become prominent. Some retail, automotive, oil and gas industries have already experienced operating pressure in 2019, and the coronavirus has made many companies bankrupt.

Judging from risks in past economic crises, the "chain reaction" of corporate bankruptcy may have emerged, and the risk of global corporate bankruptcy may continue to rise in the future.

In the Asian region, the overall situation is complex, with factors such as the epidemic, economic downturn, changes in the geopolitical structure, and the game of major powers intertwined.

Risk changes in India, Kyrgyzstan, Lebanon, Turkey, Thailand, Iran and other countries are worthy of attention. In Europe, political risks are generally low. However, politics is becoming fragmented, and domestic political conflicts in some countries have intensified.

Affected by unfavorable factors such as the world economic recession under the epidemic, the intensification of trade frictions between the United States and Europe, and Brexit countries in the eurozone, the government's financial burden has increased.

Risk changes in Spain, Italy, the United Kingdom, France, Africa and other countries are worthy of attention. In some countries, the domestic political and social security situation is turbulent due to general elections and geopolitics.

The economic downturn has also increased the possibility of social unrest and violence in some countries. Risk changes in Angola, Zambia, Congo (Kinshasa), Ethiopia, Ghana, Kenya, South Africa and other countries are worthy of attention.

The Latin American region is also facing new challenges from politics, economy, debt, society and other aspects, as many countries have fallen into a relatively large recession, resulting in sovereign debts.

Four Characteristics of Future Global Risks
The "Report" believes that since the second half of 2019, especially since the outbreak of the coronavirus pandemic in early 2020, the global national risk level has risen significantly, and will remain high in the next period. This is mainly reflected in the following aspects:

First off, most countries face challenges when it comes to political stability. The continuous spread of the coronavirus pandemic, the increasing prevalence of trade protectionism, the rising populism, and the insufficient governance capabilities of some countries will remain the same for a while. Geopolitical tensions in some regions will continue to increase and political games between major powers could occur down the line.

Second, the global economic recovery is full of difficulties. The pandemic could last for a long time and require long-term response measures. This will have an impact on international production networks, global supply chains and value chains.

The fiscal and monetary policies of various countries have been compressed, along with financial market turmoil and rising labor unemployment. Plus, the deterioration of the political environment and the economic blockade caused by the new crown pneumonia epidemic has had a serious negative impact on the business environment of countries around the world.

Fourth, public debt risks will be higher than ever. In the face of the epidemic, the uncertainty of economic recovery and the sharp drop in commodity prices, some resource exporting countries have sharply reduced their export revenues and faced rising fiscal pressures. In the future, the public debt risks of some countries with higher debt levels may continue to rise.
Sinosure Actively Assists Companies in Coping with Overseas Risks
Affected by the coronavirus pandemic, world economic growth continues to slow down. Sources of global turbulence and risk points continue to accumulate, while risks in political, economic, social, and security fields increase as well. Suffice to say, Chinese economic and social development is facing unprecedented Risks and challenges.

Since the beginning of 2020, SINOSURE has urgently introduced a series of measures to fully support Chinese enterprises and help them to resume to work and continue production. In the first 10 months of this year, Sinosure had underwritten a total of 564.8 billion U.S. dollars.

In addition, as a financial institution that specializes in risk management, Sinosure consciously proceeds from the situation of national financial security, and strived to promote digital transformation under the company's new development strategy framework.

The company also actively used financial technology tools such as big data and artificial intelligence. Sinosure utilized specially established country risk research centers, credit evaluation centers, credit channels and recovery channels etc to strengthen the tracking, analysis, research and judgment of risks.

Ever since the coronavirus outbreak, Sinosure has adhered to special and urgent matters, and provided 7×24-hour insurance services for the urgent needs of customers during the epidemic. What's more, Sinosure has continuously strengthened country and industry risk research, and updated foreign government trade Control policies. The company took this initiative to notify international markets about various risk changes, helping them make well-informed decisions.

Source: China Export Credit Insurance Corporation

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