Europe's China-related trade risks confine to some countries

    China's (A1 stable) trade tensions with the US (Aaa stable), slowing growth and the rebalancing of its supply chain away from imports present risks for the European Union (EU, Aaa stable) and for certain EU industries, Moody's Investors Service said in a report today.
  The EU's overall direct exposure to China amounts to only 1.6% of the bloc's GDP.
  Although it represents an under-exposure to the Chinese economy, relative to its global importance, by more than 40%, it is concentrated in a few countries and sectors.
  "The China-related risk for EU countries and sectors is low overall and the exposure is concentrated in a handful of countries," said Vincent Allilaire, a Moody's Vice President - Senior Credit Officer and the report's author. "The concentration of risk in some sectors is large enough to pose a significant threat to these specific sectors."
  Machinery, motor vehicles, and chemicals and pharmaceuticals have the largest amount of EU exports to China on an absolute basis, although the exports in all three sectors have recently leveled off.
  Finland, Ireland, Germany, and the Central and Eastern European countries could be more sensitive to China's volatility because their exposure arises mostly from a single sector, or from related industries.
  The four largest EU economies, Germany, the UK, France, and Italy, are by far the most exposed to the Chinese market in absolute terms. As a proportion of their respective GDP, however, Germany, Ireland, Slovakia, Denmark, and Hungary have the largest exposure.
  Overall, EU exports to China are only half the size of EU exports to the US; that level also would represent only half the level of exports to the UK in a post-Brexit scenario.