Coronavirus Threatens $122bn of Chinese Trade Exposure in Q1 2020

The top ten Chinese companies, with combined revenues of almost $1.5 trillion will be exposed to an estimated $122 billion of connected loss exposures from coronavirus, according to risk modelling firm Russell Group.

Based on a sample of historic Q1 economic data for Chinese economy and companies, Russell’s scenario model outlines the disruptive impact of the coronavirus on both the Chinese economy and Chinese companies.

China National Petroleum Corporation, which reported revenues of $359 billion for the year, tops the chart of Chinese companies with the largest exposure at $29 billion. Petroleum companies face the largest exposures but other industries are affected too. Huawei’s combined exposure across the different parts of its business amounts to $16 billion. Meanwhile, Apple China’s loss exposure amounts to $3 billion alone.

Commodities which are a vital component of the global economy will also be affected too. Russell analysis shows that integrated circuit boards are the largest imported commodity into China ($46 billion), followed by crude oil ($15 billion).

The top ten commodities imported into China amounts to $122 billion and comprise 64 percent of the total commodity imports into China.

The top ten commodities exported together from China amount to $72 billion and make up 51 percent of total commodity exports from China.

The numbers will compound global insurers and risk managers’ fears that the coronavirus is set to cause massive business interruption and unbalance today’s delicate and complex global supply chains.

Russell Group managing director Suki Basi said: "While the China import/export numbers may be excessive, they only represent a partial analysis of the wide global picture, which is a major concern for businesses, risk managers, analysts and investors in managing the coronavirus disruption. However, as we have shown here, deeper data-led insights of business and trade flows can help businesses and their re/insurers ensure that their operations become resilient to failure."