The latest edition of Deloitte's survey of Chief Financial Officers (CFOs) at Chinese firms reveals a sharp drop in sentiment.

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HONG KONG, CHINA -�Media OutReach�-�December
19, 2018 -�According to the 2018
Q3 survey, 82 percent of the CFOs are less optimistic about economic prospects
than they were six months ago--a 52 percentage point increase from six months
earlier--with rising trade protectionism seen as biggest risk. As far as their
own businesses are concerned, more than half the CFOs surveyed (56 percent) say
they have already been hit by trade tariffs, and only 38% expect to meet their
revenue targets.

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"There has
been a sharp shift in sentiment," says William Chou, National Managing
Partner of Deloitte China CFO Program. "The bright spots of six months
ago, including several economies that were doing better than expected, have
faded. It's no surprise sentiment among Chinese CFOs has declined given goods
flow between China and the US have borne the brunt of trade measures."

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The ongoing trade
war and the prospect of economic turmoil (27 percent of respondents cited this
as the second biggest area of concern) have even managed to put technology to
the back of Chinese CFOs' minds. Not one of the surveyed CFOs views disruptive
technologies as a concern, down from 10 percent in Deloitte's Q1 survey.

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"With no
immediate agreement for tariffs, Chinese stock markets struggling, and the
prospect of pressure from government policies, it looks like CFOs are right to
be negative. However, China and the U.S. are striving to resolve their trade
issues. If they can eventually reach an agreement, business sentiment will
quickly improve," adds Chou.

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The survey brings
brighter news for economies in Southeast Asia, which was picked by 53 percent
of CFOs as the country or region best placed to benefit from Sino-US trade
tensions.

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"Trade
tensions between the US and China aren't going to do either of them much
good," says Jens Ewert, Deloitte China CFO Program MNC Sector Leader.
"With 58 percent of respondents saying China is going to see the biggest
drop in export volume, and 28 percent picking the US, it's hard to avoid the
conclusion that the ongoing trade tussle is a lose-lose situation for the two
main protagonists."� �

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As one of the key initiatives of Deloitte China CFO
Program, the Deloitte China CFO Survey is conducted every six months as a
temperature check of business and economic sentiment and a source of insights
on burning business issues and challenges. The latest survey was conducted
between September and November this year, with 108 responses from senior
corporate executives.

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� 2018. For information, contact Deloitte
China.

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