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Chinese Business Climate Index Rises to New High
China's business climate index rose to its highest level of the past seven quarters in the second quarter of this year, official figures show.
The figures released Tuesday by the National Bureau of Statistics (NBS) show that the index rose to 121.7 points by the end of June, 6.5 points higher than at the end of March and 11.8 points higher than one year ago.
NBS said that the country's corporate sector saw increased production, improved efficiency and growing entrepreneur confidence in the second quarter of the year.
The new high of the business climate index indicates that the corporate sector has been on the track of normal development, according to NBS.
In the second quarter, the entrepreneur confidence index rose to an all-time high of 115 points after setting a record in the first quarter. The index was 23.2 points higher than one year ago.
Nearly 80 percent of Chinese entrepreneurs are optimistic about the economic situation in the third quarter, and NBS predicts that the confidence index will continue to rise to 116 points in the next three months.
Entrepreneurs' faith also helped boost corporate investment. According to NBS, the climate index of corporate investment in fixed assets rose to 110 points in the second quarter, registering its highest level of the past few years.
NBS said that the after-tax profits index has emerged from its slump of the past few years and entered a more promising zone. The index rose by 11.3 points over the first quarter and 19.3 points over one year ago to 102 points in the second quarter.
The corporate sector saw reduced stockpiles, more orders and sales and much greater demand for labor from April to June, according to NBS.
NBS predicts that the performance of the corporate sector will continue to improve in the third quarter, with the business climate index growing to 123 points. It predicts that the indices of all industries except the service industry will continue to improve in the next three months.
However, growing costs and inadequate current funds are concerns of the corporate sector, NBS said. The cost index dived to its lowest level of 85 points in the second quarter, while the index of current funds languished at a low of 65 points.
NBS said that the strong bounce back of major indices of corporate performance and the sudden surge of entrepreneur confidence over the past two quarters are positive signs that China's economy has come back to life.
It predicts that the economy will grow faster this year than last year.
According to NBS, the surge of the business climate index was mainly due to government investment and growing exports. The surge is unstable because of inadequate domestic demands, weak micro- economic mechanism and imbalance between demand and supply.
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