Chinese business confidence plunges to its lowest in nearly a decade, says survey

A survey by World Economics released on Monday shows that confidence in Chinese business fell to its lowest since January 2013. This has been attributed to the country’s surge in COVID-19 cases and its impact on economic activity as well as the abrupt lifting of Beijing’s stringent zero-Covid policy and pandemic control measures.

The London-based data provider’s Sales Managers Survey accounted for more than 2,300 companies and was conducted between December 1 and December 16. China’s index was the lowest since the survey first began in 2013 which could be the first indicator of deteriorating business sentiment after relaxations in Covid measures, earlier this month which triggered a fresh wave of infections across the country.

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“The survey suggests strongly that the growth rate of the Chinese economy has slowed quite dramatically, and may be heading for a recession in 2023,” said World Economics. It added that while “lights may not have gone out, prospects for economic growth in 2023 have certainly dimmed.”

Furthermore, the survey also noted that business activity plunged this month as almost all component Indexes in both the Manufacturing and Service Sectors are now below the 50 level. This comes after the recent dismantling of China’s zero-Covid policy, some of the toughest measures against the pandemic, which were preceded by widespread protests which had already negatively affected the economy.

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“The percentage of companies that claim to be currently negatively impacted by COVID has risen to a survey high, with more than half of all respondents now suggesting their operations are being harmed in one way or another,” said World Economics.

Last week, after a two-day closed-door meeting China’s top leaders and policymakers said that they would focus on stabilising the economy in the upcoming year. As the country faces issues on multiple fronts including a rise in Covid infections which continue to impact businesses and consumers alike as well as a weakening global economy hampering Beijing’s exports.

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Some of these measures include stepping up the fiscal policy to make it more efficient, and maintaining the intensity of spending, while monetary policy will be precise and forceful, keeping liquidity reasonably ample, said a statement issued after the annual Central Economic Work Conference, published by the Chinese news agency Xinhua.

(With inputs from agencies)

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