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Business confidence in China up for second quarter in a row

In a fresh sign of recovering economic momentum, confidence among mainland businesspeople and bankers has picked up for the second quarter in a row, according to survey results published by the central bank on Sunday.

Based upon a survey of 5,000 businesses, the business confidence index compiled by the People’s Bank of China rose 2.2 percentage points to 51.2 per cent in the third quarter, putting it above the same time last year.

An index measuring exports and profitability showed noticeable improvement in the third-quarter survey.

China’s new loans beat expectations in August but home mortgages still main driver

In a separate quarterly survey of bankers working at 3,100 branches across the country, the central bank said banker confidence had also climbed in the quarter. The index rose to 46.5 per cent,or 2.8 percentage points higher than the previous quarter.

The improvement in sentiment among entrepreneurs and bank managers came after the mainland published a slew of economic indicators for August pointing to recovery in the world’s second-biggest economy.

Imports last month were stronger than expected, coupled with an acceleration in industrial output and a stabilisation in fixed-asset investment.

China’s economy shows more signs of strengthening as industrial output picks up, investment holds steady

The central bank is refraining from aggressive monetary policy easing.

Instead, it is opting for day-to-day fund management in the interbank market to keep ample funding for a nascent economic rebound.

Bank loans in August increased by nearly 950 billion yuan (HK$1.1 trillion), with more than two-thirds of the increased loans extended to households as mortgages, according to central bank data.

But whether the recovery can be sustained is still subject to government spending and the performance of a red-hot housing market in the mainland’s biggest cities.

Tightening measures having little effect on surging property prices

The central bank survey of 20,000 urban households found about a quarter, or 23.1 per cent, of respondents expected home prices to rise in the next quarter. Only 11.9 per cent of respondents said they expected housing prices to fall. The rest expected home prices to remain flat or had no idea which direction property prices might head.

As a result, as many as 16.3 per cent of urban residents plan to buy property in the next three months – a rise of 1.3 percentage points from three months ago, according to the central bank.

An index measuring demand for loans from businesses, on the other hand, dropped to 55.7 per cent, down from 56.7 per cent in the second quarter and 62.7 per cent in the first quarter.

Loan demand from the manufacturing sector was particularly weak.