China’s rise is increasing competitive pressure on Switzerland
Keystone-SDA
Economists at Swiss bank UBS view China’s economic rise as a major challenge for the Swiss economy. The US tariffs, on the other hand, are likely to have only a temporary impact.
Over the past decade, China has increasingly transformed itself from the “world’s factory” into a hub for high technology. For example, the country has built up its own chip industry, and in the automotive sector, too, it has at least caught up with Western suppliers.
Furthermore, Chinese firms are increasingly emerging as competitors in the mechanical engineering, electrical engineering, chemical and medical technology sectors, as experts at UBS note in their economic outlook for Switzerland, published on Thursday.
+ The numbers behind China’s pharma rise
Owing to the sometimes significant overcapacity in China and weak domestic demand, Chinese firms are increasingly turning to exports. This is putting pressure on international markets.
Switzerland still in a favourable position
At present, however, Switzerland is still in a “relatively favourable position”, for example compared with other European countries. This is because Swiss exports focus on high-value-added products such as pharmaceuticals, precision instruments, watches and specialised machinery. Chinese exporters are not yet particularly active in these sectors.
However, Chinese suppliers are also increasingly making inroads into sectors such as mechanical engineering and precision and medical technology, said UBS economist Meret Mügeli. These very fields have been regarded as particular strengths of the domestic industry.
+ Swiss seek China business boost as old trade links unravel
Switzerland is therefore not immune to competitive pressure from China. This is because such pressure is “approaching the very core of the Swiss industrial model”, according to one of the study’s conclusions.
US tariffs manageable for Switzerland
In contrast to China’s expected long-term industrial and technological rise, the US tariffs are likely to have only a temporary impact. “For Swiss industry as a whole, the impact remains manageable, as the pharmaceutical sector accounts for a significant proportion of exports and benefits from exemptions,” said UBS economist Maxime Botteron.
The average tariff rate is only around 6 per cent, and the tariff differential with the EU is now minimal.
+ How we produce news in English
Translated from German, reviewed by an English Department journalist.
