Exposure of Spanish firms to imports of critical inputs from China: a survey-based analysis

Rationale High trade dependency on China could pose a risk to the Spanish economy in the event of trade disruptions or if geopolitical tensions were to escalate. This article analyses the evidence from a module in the Banco de España Business Activity Survey (EBAE), harmonised with the Banca d’Italia and the Deutsche Bundesbank, asking Spanish firms about their dependence on critical inputs imported from China. Takeaways •10% of Spanish firms import critical inputs from China. Within manufacturing, 20% of Spanish firms do so, a figure similar to Italy’s 17%, but less than Germany’s 34%. •Only 22% of Spanish manufacturing firms that import critical inputs from China have adopted measures to reduce their exposure. A total of 30% and 40% of their Italian and German counterparts, respectively, have already adopted strategies to reduce such exposure. •Among the Spanish manufacturing firms that have taken measures to reduce their dependence on critical inputs from China, half have replaced Chinese suppliers with others located in the EU. This is also the preferred strategy of Italian and German firms.