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Covid Pushes China Business Confidence to Lowest in a Decade

The survey suggests that the Chinese economy “may be heading for recession in 2023,” World Economics said

A restaurant waits for customers in the Qianmen district, one of the top tourist destinations in Beijing, as the spread of the novel coronavirus disease continues in China
Chinese leaders have pledged to boost private sector confidence.


China’s business confidence dropped to its lowest in nearly a decade, a survey showed on Monday, pointing to the impact of rapidly rising Covid-19 cases on the country’s economic activity.

The index dropped from 51.8 in November to 48.1 in December, according a World Economics survey of sales managers at over 2,300 companies, conducted between December 1 and 16.

This was the lowest level since the survey began in 2013.


Also on AF: Beijing Trading Floors Hit Hard by Spread of Covid-19


The survey results are among the first indicators of declining business sentiment in the world’s second-biggest economy, after Beijing’s abrupt easing of rigorous containment rules on December 7 sparked a still-growing wave of Covid cases across China.

“The survey suggests strongly that the growth rate of the Chinese economy has slowed quite dramatically, and may be heading for recession in 2023,” World Economics said.

China’s GDP is predicted to expand by just 3% this year, which would be its poorest performance in almost half a century.


Businesses out of liquidity

The survey revealed a dramatic decline in business activity in December, with the sales managers indexes in Manufacturing and Service Sectors both below the 50 level.

“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,” the London-based data provider said.

China has recently made sweeping changes to its zero-Covid policy — the world’s toughest anti-Covid curbs and lockdowns — championed by President Xi Jinping. The measures debilitated the Chinese economy and led to unprecedented public unrest.

Top Chinese leaders and policymakers plan to prioritise stabilising the economy in 2023 and step up policy adjustments to ensure key targets are hit, according to an agenda-setting meeting ended on Friday.

“It may take at least another quarter before things turn around,” said Dan Wang, chief economist at Hang Seng Bank China.

“Many small businesses have run out of liquidity, especially restaurants, gyms, hotels and other city services.”


  • Reuters, with additional editing by Vishakha Saxena


Read more:

More Than a Million People Could Die of Covid in China: Analysts

Companies in China Scrambling to Keep Open as Covid Spreads

Plunging Trade Risks China’s Status as the ‘World’s Factory’

JP Morgan Upgrades China Growth Forecast Despite Covid Surge

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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