SME business confidence edges higher (2)

Geographically, the index showed companies in the north were more confident than those in the east, south and west of the country.

"The economy started to rebound in October or November, and it usually needs three quarters to witness an overall recovery. Therefore, better readings might come out later this year," said Betty Ku, regional head of China and North East Asia at Standard Chartered Bank's SME Banking.

Wang Jun, a senior analyst at the China Center for International Economic Exchanges, said: "The figures suggested that the foundation of economic recovery this time is far from solid enough.

"Enterprises feeling an economic warming usually lag behind actual economic data. Plus, this round of recovery is still based on government investment, and tends to favor large companies first, especially State-owned enterprises."

Wang added that in 2013, SMEs might be less optimistic on profit levels, as prices increase at a faster pace compared with last year, and enterprises have to re-stock inventories.

The bank figures showed that financing costs for SMEs were rising.

In the fourth quarter, nearly 45 percent of companies said their bank lending interest rates had increased, in contrast to the first quarter's 23 percent.