Confidence drops, as uncertainty continues

16 january 2013

A new international survey has suggested a marked dip in business confidence in China over the past six months, amid a global market still experiencing considerable volatility.

The biannual Regus Business Confidence Index – based on a poll of more than 24,000 senior businesspeople from 95 countries, covering almost all industries – claims many of the world’s fast-growing economies have also witnessed a significant decline in business confidence, despite some early signs of economic rebound in the world.

In China, the business confidence index dipped to 110 from 130 six months ago, while the average index around the globe stood at 111, according to the survey.

“The result is a concentrated display of sluggish demand globally, and is also in accordance with China’s economic growth slowdown for the past three quarters,” said Wang Jun, a senior economist at the China Center for International Economic Exchanges, a government think tank.

Operating in over 1,300 locations globally, Regus is considered the world’s largest provider of workspace.

Its survey showed that 61 percent of Chinese enterprises surveyed reported an increase in revenue, 6 percentage points lower than that of April.

Tang Jianwei, a macroeconomic analyst at the Bank of Communications Ltd, said the performance of domestic companies is closely related to the country’s macroeconomic situation, which has demonstrated a continued slowdown in the past nine months as suggested by key indicators.

“The slump in global demand and the rise of operational costs, such as labor and financing, are all contributing to the depression among Chinese enterprises,” Tang said.

Despite the fall in overall business confidence in most rapid-growing economies, it still remained well ahead of those in well-developed economies, said the report.

The Europe is still struggling in a continued crisis, and the US unemployment rate still stood at a high level despite its dip to 7.8 percent in September, the first time below 8 percent in four years,” Tang explained.

However, analysts said that they expected business confidence in China and other fast-growing economies, especially the BRIC countries (Brazil, Russia, India and China), to improve along with the anticipated rebound in the country and across the world.

China’s GDP growth in the third quarter reached 7.4 percent, a 14-quarter low and a decline for the seventh straight quarter, against 7.6 percent in the second quarter, according to the National Bureau of Statistics.

Analysts now predict a likely rebound in economic growth in the next quarter, benefiting from government stimulus measures that are taking effect.