Central Banks
German Economy’s China Ties Seen as Risk for Financial System
- Bundesbank sees dangers in domestic firms’ business with China
- Trade relations between Europe and China have been souring
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Germany’s close trade relations with China could wreak havoc on the financial system of Europe’s largest economy if they were to deteriorate, the Bundesbank warned.
While direct exposure is relatively small, “significant risks” result from lenders’ relationships with firms at home that are either invested in China or sell a lot of their output there, the central bank said.