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SME confidence slips again in third quarter

By Hu Yuanyuan  (China Daily)

08:08, September 28, 2012

Confidence among small and medium-sized enterprises dropped further in the third quarter, as the country's economic growth continued to slow down, a research from Standard Chartered showed on Thursday.

The SME confidence index stood at 46.71 percent, down 7.44 percentage points on the previous quarter, according to the bank's research.

A reading of above 50 shows SMEs are confident about their prospects.

The slide in the index, said Gu Chanjuan, president of SME wealth management at Standard Chartered, is mainly due to the continuous dip in China's economic growth, especially the deteriorating foreign trade situation.

"Declining exports and imports may pose the biggest challenge for China's economy in the coming months," said Wei Jianguo, former vice-minister of commerce. He said the country might find it hard to hit its trade growth target of 10 percent for the year.

"September and October may be the worst time for China's exports as it is the key season for exporters to grab Christmas orders," said Wei, adding that SMEs may have a really difficult time.

According to the report, SMEs recorded lower operational and investment confidence, down for the second quarter in a row. Their confidence in financing, however, climbed slightly on the previous quarter.

"Now is the best time for the central government to launch policies, such as tax cuts, to support export-oriented SMEs," Wei said.

Several foreign investment banks recently lowered their forecasts for China's economic growth this year.

Barclays, for instance, cut its forecast for China's GDP growth to 7.5 percent this year from its original estimate of 7.9 percent, due to weak August data, the investment bank said in a research note, which confirmed that China's growth momentum remains weak.

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