China’s business confidence fell to its lowest level since January 2013, a World Economics survey showed on Monday, reflecting the impact of rising COVID-19 cases on economic activity with the abrupt lifting of many pandemic control measures.
The index fell from 51.8 in November to 48.1 in December, showed the World Economics survey, conducted among sales executives at more than 2,300 companies conducted between Dec. 1 and Dec. 16. The index was the lowest since the survey began in 2013.
The survey results were one of the first indicators of how business confidence has taken a hit in the world’s second-largest economy, after the sharp relaxation of strict COVID containment measures on December 7 triggered a still-rising wave of domestic COVID cases across China.
“The survey clearly suggests that the pace of growth of the Chinese economy has slowed dramatically and that it could be headed for recession in 2023,” says World Economics.
China’s GDP is forecast to grow just 3% this year, its worst result in nearly half a century.
The survey showed business activity fell sharply in December, with sales manager indices for the manufacturing and services sectors both below the 50 level.
“The percentage of businesses currently claiming to be negatively impacted by COVID has reached the highest level of the survey, with more than half of respondents now suggesting their operations are being harmed in one way or another,” the London-based data provider stated.
China has recently dismantled some of the world’s strictest COVID measures. The measures were pushed by President Xi Jinping, but hurt the economy and triggered popular protests unprecedented in his tenure, which began a decade ago.
The country’s leaders will focus on stabilizing the economy in 2023 and intensifying policy adjustments to ensure key goals are achieved, according to an agenda-setting meeting that ended Friday.
Dan Wang, Chief Economist at Hang Seng Bank China says: “It may take at least another quarter to turn the tide around.”
“Many small businesses have run out of liquidity, especially restaurants, gyms, hotels and other urban amenities.”