CHINA BUSINESS CONFIDENCE SLIPS

Confidence slips to new low point

Jennifer Li
Monday, November 09, 2015

Chinese companies' confidence toward domestic business activities, new orders, and employment has fallen to fresh lows since 2009, the latest Markit Business Outlook Survey shows.
That echoes China's disappointing trade data for last month that officials released yesterday, with both exports and imports dropping faster than expected as global demand weakens.The survey, carried out last month, found only 17 percent of mainland manufacturers and service providers expect business activity to rise over the next year, down from a previous low of 23 percent in June.Consequently, their optimism toward new business, revenue, employment growth and increase of capital expenditure also slid to record lows. The thrice-a-year survey covers 12,000 firms globally which are drawn from the same panels as the Markit purchasing managers' index."Chinese firms have seen business confidence wane since early 2015," said Markit economist Annabel Fiddes. "Relatively weak client demand and increased competition for new business has led companies to expect to use price discounting strategies in the year ahead." Imports fell for a 12th straight month, down 18.8 percent from a year back in US dollar terms. That compared with September's drop of 20.4 percent and expectations of a 15.2-percent fall. Exports dropped 6.9 percent from a year back following a 3.7 percent year- on-year drop in September, and was much worse than a market estimate of 3.2 percent. For the first 10 months this year, the world's second-largest economy saw exports decrease 2.5 percent and imports 15.7 percent from a year ago."We see that the trade will unlikely turn around the momentum in the near term, and the yuan exchange rate will be under downward pressure, especially as the US Federal Reserve is signaling a hike soon," a Commerzbank China economist told Reuters.