According to a survey released on Monday by World Economics, China’s business confidence has dropped to its lowest level since January 2013. This decline is due to the abrupt lifting of many pandemic control measures as well as the impact of the country’s rising COVID-19 cases on economic activity.
According to a survey of more than 2,300 sales managers at over 2,300 companies conducted by World Economics from December 1–16, the index dropped from 51.8 in November to 48.1 in December. Since the survey’s inception in 2013, the index had never been lower.
After the abrupt relaxation of strict COVID containment measures on December 7 sparked a still-growing wave of domestic COVID cases across China, the survey results were among the first indicators of how business sentiment has been negatively impacted in the second-largest economy in the world.
“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.
This year, China’s GDP is predicted to grow by just 3%, which would be the worst result in almost 50 years.
The survey found that the manufacturing and service sectors’ sales managers’ indices both fell below the 50 mark in December, indicating a sharp decline in business activity.
“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 recently dismantled some crucial components of the strictest anti-COVID lockdowns and curbs in the world. President Xi Jinping supported the measures, but they hurt the economy and led to unprecedented public unrest during his ten-year rule.
According to an agenda-setting meeting that ended on Friday, the top decision-makers will prioritize stabilizing the economy in 2023 and stepping up policy adjustments to ensure key targets are met.
“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.”
(Adapted from WionNews.com)