Small business confidence in China continues its decline despite reopening

According to information provided by Standard Chartered Plc, economic activity of small business in China continued decreasing in December. A rise of COVID cases during reopening has worsened prospects for the country’s companies.

As shown by the fresh data, a gauge of business conditions at small and medium enterprises showed contraction in December. The gauge has been in contractionary territory for three subsequent months, although it has demonstrated certain improvement in comparison with the previous month. According to the report, the ‘performance’ sub-index increased by 0.1 point to the level of 48, while the ‘expectations’ sub-index decreased by 0.4 point to 49.3. This decrease is linked to a weaker outlook for sales and labor usage.

At the same time, some improvement was also registered in the manufacturing sector — a number of new orders rose as compared to November, as well as sales and production. As it was written in the report by the company’s economists Hunter Chan and Ding Shuang, these changes might be caused by a positive effect the easing of COVID control had on the economy. Nevertheless, they also noted difficulties faced by services SMEs due to weak consumer sentiment amid rising COVID cases. Meanwhile, the performance and the expectations sub-indexes fell below 50.