### Summary
Business confidence is negative at the beginning of the third quarter of this year, with a decline in expectations about purchase orders and investments.
### Facts
- 📉 Business confidence remains negative across almost all sectors, with exceptions in information and communication, and culture, sports, and recreation sectors.
- 👍 Retail trade, construction, and real estate sectors show improving confidence, although it remains the lowest in real estate.
- 📉 Car maintenance, repair services, and wholesale trade experience the biggest decline in confidence.
- 💼 Entrepreneurs' outlook on order positions is pessimistic, with a net 2 percent anticipating a drop in order values over the next quarter.
- 💼 Most sectors have a less optimistic or more pessimistic forecast for order positions compared to last year, with significant drops in culture, sports, recreation, manufacturing, and car trade and repair.
- 💼 The accommodation and food service sector remains the most optimistic in terms of order positions.
- 💸 17 percent of entrepreneurs predict more investments compared to 2022, while 16 percent anticipate a decrease and 67 percent expect stable investments.
- 💸 Investment optimism is at a low level, with the largest drop in predictions observed in the accommodation and food services sector.
- 💸 Entrepreneurs in agriculture, forestry, fisheries, and construction are most pessimistic about investments this year, while the culture, sports, and recreation sector is the most optimistic.
China is facing a severe economic downturn, with record youth unemployment, a slumping housing market, stagnant spending, and deflation, which has led to a sense of despair and reluctance to spend among consumers and business owners, potentially fueling a dangerous cycle.
China is making efforts to restore confidence among businesses and consumers after crackdowns on the private sector and harsh Covid restrictions have negatively impacted its economy.
Beijing needs to provide clarity on its economic plans and the national security crackdown in order to rebuild confidence in the future trajectory of China and address uncertainties, according to the head of a European business lobby in China.
China's economy is facing challenges with slowing growth, rising debt, tumbling stock markets, and a property sector crisis, and some analysts believe that heavy-handed government intervention and a lack of confidence are underlying causes that cannot be easily fixed. However, others argue that China's problems are solvable and that it remains a superpower despite its considerable problems.
China's economic model, driven by industrialization and exports, is showing weaknesses with an imbalanced economy, low demand, slumping trade, and a struggling property sector, highlighting the need for structural reforms to boost domestic consumption and confidence.
Chinese consumers are saving rather than spending, even with the burden of debt, indicating a lack of confidence in the country's economy.
Investors are becoming increasingly concerned about the state of China's economy as informal gauges, such as PMI surveys and soft surveys, indicate a deep-seated confidence problem and a potential miss of the country's 5% growth target this year, leading to a retreat from global assets exposed to the slowdown.
China's economic problems are beginning to resemble Japan's long-lasting issues, as a real estate crisis, an aging population, surging youth unemployment, and high local government debts create a crisis of confidence, potentially leading to a "lost decade" of economic stagnation and deflation, while Japan shows signs of climbing out of its decades-long economic nightmare with rising inflation and a potentially optimistic outlook.
China's economy is facing significant challenges, including a property crisis, youth unemployment, and a flawed economic model, but the government's limited response suggests they are playing the long game and prioritizing ideology over effective governance.
China's economy is facing numerous challenges, including high youth unemployment, real estate sector losses, sluggish growth in banks, shrinking manufacturing activity, and lack of investor confidence, indicating deeper systemic issues rather than cyclical ones.
China's failure to restructure its economy according to President Xi Jinping's bold reform plans has raised concerns about the country's future, with the possibility of a financial or economic crisis looming and a slow drift towards stagnation being the most likely outcome. The three potential paths for China include a swift, painful crisis; a gradual winding down of excesses at the expense of growth; or a switch to a consumer-led model with structural reforms that bring short-term pain but lead to a faster and stronger emergence.
The prospect of a prolonged economic slump in China poses a serious threat to global growth, potentially changing fundamental aspects of the global economy, affecting debt markets and supply chains, and impacting emerging markets and the United States.
China's economic slowdown is posing a significant challenge to President Xi Jinping's agenda, forcing him to make difficult choices and potentially relinquish some control over the economy. The slump in housing sales and the crackdown on private capital are among the factors contributing to the economic setbacks, prompting calls for change and a reevaluation of economic policies under Xi's highly centralized leadership. However, Xi seems reluctant to make major changes to his strategy, opting for a hands-off approach and avoiding a big rescue plan for distressed developers and local governments. The central government's control over taxes and the need to revamp the fiscal system further complicate the situation. Restoring government finances while reassuring private investors is a daunting task that requires strong leadership and potentially contentious policy changes. The upcoming Communist Party meetings will shed light on how Xi plans to restore confidence in his economic agenda, but some economists and former officials warn that time may be running out for China to embrace necessary reforms.
China's economy is expected to grow less than previously anticipated due to struggles in the property market, leading economists to predict further downgrades and posing risks to both the domestic and global economy.
Big Japanese manufacturers and the services sector in Japan are experiencing a decline in confidence, with concerns of a slowdown in China's economy affecting global and domestic growth, according to a Reuters poll. The weak sentiment in the business sector raises doubts about the ability of exports to drive economic recovery amid weak domestic demand. Many companies cited high input costs and weak demand as contributing factors, along with geopolitical risks and tensions between the US and China.
The performance of Alibaba and JD.com stocks suggests that investors are uncertain about whether China's economy is improving despite positive Chinese data.
Signs of improvement in China's economy, such as improving credit demand and easing deflationary pressures, may not be enough to stabilize the economy due to bigger concerns of decreasing affordability, tight wages, and rising costs that have not been addressed. A comprehensive policy revamp may be necessary for China's economy to recover.
The disappearance of China's defense minister and a series of recent upheavals in the country's top ranks are creating uncertainty about President Xi Jinping's leadership, which could impact other countries' confidence in China's economy and political stability.
China's government has been less transparent and tolerant of bad economic news, leading to concerns about the country's economic stability and potential risks for investors.
China's economic data for August shows a mixed picture, with retail sales and production on the rise, property investment declining, and the urban jobless rate ticking downward, leading experts to believe that while there may be modest improvements in growth, a strong recovery is still unlikely.
Pessimism among U.S. businesses operating in China is on the rise, with a record low percentage of firms optimistic about their five-year outlook, according to a survey by the American Chamber of Commerce in Shanghai, driven by concerns over geopolitics and a slowing economy.
US business confidence in China is being drained by geopolitical tensions and an economic slowdown, with only 52% of American firms optimistic about their five-year China business outlook, according to a study by the American Chamber of Commerce in Shanghai.
China's economic woes may not be catastrophic as its policymakers and the country's vast resources, coupled with its massive economy and global interconnectedness, offer potential for recovery despite mounting financial and geopolitical pressures.
China's economy showed positive signs of recovery in August, with an increase in industrial output, retail sales, and consumer inflation, indicating resilience despite concerns of "stagnation" or "collapse" in Western media reports; willingness to spend also recovered, with an increase in residents' income, per capita consumption spending, and domestic tourism; furthermore, China's exports remained resilient, with a steady increase in the export share of intermediate and capital goods, outweighing the decline in the export share of consumer goods.
China should focus on structural reforms instead of relying on macroeconomic policies to revive its growth, as it has limited room for further monetary policy easing, according to a central bank adviser. The adviser suggests encouraging entrepreneurs and implementing demand-side and supply-side reforms to aid the economy. Recognizing the status of private businesses is also essential for revitalizing investor confidence.
China's economic troubles are largely attributed to their centralized planning approach, which has led to wasted resources, missed opportunities, and ineffective projects, serving as a warning for other nations considering similar strategies.
China is seeking to increase productivity and efficiency in its industrial northeast region, facing economic challenges such as an aging population, declining birthrate, and a real estate crisis, but some economists argue that the government's focus on industrial investments is outdated and lacks measures to stimulate consumer confidence and spending.
US companies' optimism about their business prospects in China is at a record low, with US-China tensions and negative effects on businesses being the biggest challenges, according to a survey by the US-China Business Council. Despite the low optimism, China remains a top-five priority market for 74% of companies surveyed.
China's economy is showing signs of a stronger recovery, with indicators such as increased activity around shopping malls, a pickup in cement manufacturing, and a surge in traffic congestion, suggesting renewed consumer confidence and a positive direction for the construction sector.
China's economic recovery is not progressing as expected, disappointing money managers.
China's economic malaise is attributed to a failure to implement necessary reforms, with structural threats to stability increasing and growth expectations diminishing, according to a report by Rhodium Group and the Atlantic Council, which warns that the country's goal of becoming the world's largest economy may be delayed.
The slow recovery of foreign tourism in China due to visa obstacles and fears of the country is hindering the nation's economy and its ability to attract foreign investment.
China's trade slump is gradually easing as September's exports fell less than expected, indicating a potential bottoming-out of global trade; however, uncertainties in the property sector and weak confidence among private firms continue to pose risks to the country's economic recovery.
China's economic recovery has led to a drop in confidence among companies and jobseekers, with some industries becoming more conservative about hiring and senior candidates less willing to change roles, despite the government reporting an overall stable labor market. Recruitment agencies have reported shrinking revenues, although certain sectors such as hospitality, catering, and new energy show potential for job growth. Factors such as the focus on domestic replacement, declining demand in certain industries, and the impact of China's crackdown on private tutoring and the property market have contributed to the challenging job market conditions.
China's economy is facing uncertainties due to concerns about the property crisis, a lack of confidence, and a slowdown in year-on-year GDP growth, which is expected to be below Beijing's target of around 5%.
China's economy shows signs of recovery despite slipping stocks of big Chinese firms traded in the US.
