China’s business mood shows post-Covid economic recovery has a long way to go

A quarterly survey by China’s central bank shows that business confidence and activity in the world’s No 2 economy are still at low levels

Economic prospects early next year do not look much brighter, with domestic challenges coinciding with stronger external headwinds

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A survey conducted by China’s central bank in the fourth quarter shows that business confidence in the world’s No 2 economy is still low. Photo: Xinhua

Published: 8:00pm, 28 Dec 2022

China’s economic recovery is still challenged by weak business sentiment and shrinking industrial orders, according to a new survey, as economists warn mounting external challenges could derail a full recovery.

A survey conducted by China’s central bank in the fourth quarter shows that business confidence and activity in the world’s No 2 economy are still at low levels almost three years after the start of the coronavirus pandemic, indicating a bumpy recovery ahead.

More than half of business owners claimed that the economy is cooling and the business climate getting weaker, according to the People’s Bank of China, which published the poll of 5,000 entrepreneurs in the industrial sector on Tuesday.

China’s leadership faces a daunting task to stabilise the economy, which has been hit hard by years of hardline Covid controls that were only dropped in a sudden policy shift in early December. The relaxation of zero-Covid has unleashed China’s worst wave of virus outbreaks to date.

At a virtual meeting on Monday afternoon, the National Development and Reform Commission (NDRC), the country’s top economic planner, urged officials from four regional economic powerhouses – Beijing, Shanghai, Anhui and Guangdong – to step up stabilisation efforts.

“We must grasp the window of opportunity to ensure the use of policy and development financing tools to maximise workloads,” the NDRC said in an online statement.

“We must strive for a good beginning for the next year.”