China Business Confidence at Two Year High in March


 
Chinese Business Confidence rose significantly in March. Confidence in both the Manufacturing and Services sectors is now well into positive territory, although Services is clearly currently in the ascendant registering a 53.3 Index reading, a 15 month high.

Chinese Business Confidence in March at 2 year high
Diffusion Index: 50 = ‘no growth’
China Business Confidence at Two Year High in March


The Business Confidence Index is particularly important as the question asked of panel members relates to their confidence in the future course of business activity, not its present level. Sales Managers, because of the very nature of their work tend to be more attuned to the future. They are in general very aware of levels of contracts they expect to be signed shortly, as well as current order books, with the potential personal impact of likely sales levels on bonuses linked to sales. Economists often refer to levels of Business Confidence as "animal spirits", reflecting the great importance of Confidence on future levels of investment and employment.

However the overall message regarding China must remain one of caution, until more data points illuminate the likely course of economic activity in the second quarter of 2025. One particular hazard may significantly alter the short term outlook in China - the much heralded imposition of giant tariffs by the American Trump regime. In this context, the more muted optimism evident in the Chinese Manufacturing sector is not surprising. The big question remains : can the world's great growth engine of the past few decades move back towards its previously central role in sponsoring global economic expansion. Or will tariff wars with the USA keep China's growth and its influence on the world economy more restricted than has been the case for the past three decades.

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