Optimism for Chinese firms over the next six months still holds, but the corporate financing environment is getting difficult and the corporate inventory is increasing, according to the CKGSB Business Conditions Index, which registered 61.5 in February, a slight increase on January’s mark of 59.8. For CKGSBʼs sample of successful businesses operating in China, corporate sales index fell slightly from 82.7 to 80.5, while profits rose from 67.0 to 72.2, both are well above the confidence threshold of 50. Yet the other two sub-indices—corporate financing and in inventory—are below 50.
Optimism for Chinese firms is increasing. As they’re making money, they also face different issues. The CKGSB Business Conditions Index posted a mark of 60.8 in November, up from October’s 58.5. This shows that for the survey’s sample firms, of which the majority is relatively successful in China, the next six months are viewed with increased optimism. The CKGSB BCI comprises four sub-indices. Of these, corporate sales fell slightly from 75.4 to 74.0, while corporate profits rose from 57.4 to 61.8. The fact that both of these indices are both well above the confidence threshold of 50 shows that company prospects are improving.
China’s industrial economy remains at the bottom of an L-shaped economic trend, according to the latest CKGSB survey of over 2,000 industrial firms nationwide. The survey, led by CKGSB Professor Gan Jie, shows that overcapacity and weak demand remain the biggest challenges for China’s industrial economy. The Business Sentiment Index, a major indicator of the survey, stood at 46 in Q2 2016, the same with last quarter, but still indicative of contraction. The BSI is the simple average of three diffusion indices including current operating conditions, expected change in operating conditions and investment timing.