9th Greater China Capital Confidence Barometer

Economic outlook – confidence rises

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Nearly 80% of Chinese investors think the global economy is improving, up from 55% six months ago. Three-quarters see accelerating improvement locally, up from 61%.

Chinese respondents are the most bullish about their local economy of the four BRIC countries, with less than half of those in Brazil, India and Russia expressing confidence in their local economies. The increase in optimism stems in part from a more stable political situation, both domestically and overseas, and more stable growth rates compared with the stratospheric expansion of recent years.

Yet the positive sentiment about economic growth masks an underlying caution that is tempering the apparently bullish outlook and contributing to a degree of bifurcation between the sentiment of local and overseas investors.

Q: What is your perspective on the state of the economy today?

EY - What is your perspective on the state of the economy today?
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What is your perspective on the state of the economy today?

EY - What is your perspective on the state of the economy today?
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Upsurge in those who see economic improvement

Chinese respondents are significantly upbeat about the state of both the global and local economy compared with six months earlier and dramatically so compared with a year ago. Seventy-five percent see improvement in local economic conditions, compared with just 19% who see stability, compared with 61% and 38% six months earlier and 6% and 82% a year ago.

Growth expectations improve

The majority of Chinese respondents anticipate growth in both the global and Chinese economies. Thirty-one percent expect the global economy to grow by 3%-5%, double the number from six months ago. Supporting this confidence is an improvement in economic conditions in mature economies such as the US and Eurozone.

Despite slowing growth at home during the first two quarters of the year, more than a third of Chinese respondents are more upbeat and expect the local economy to grow by in excess of 5% in the next 12 months.

Commitment to job creation underscores push for growth

Chinese companies plans for job creation are the most bullish they have been in two years, with 61% expecting to hire, significantly more than the global average of 48%.

Confidence weakens on leading indicators

Chinese companies are broadly positive across economic indicators at the global level. Like their global counterparts, they are less confident about market stability.

Locally, some clear areas of concern remain. Chinese executives are less confident about both corporate earnings and credit availability than they were six months ago, areas that reflect the broader qualms related to slowing economic growth.

Regulatory issues loom larger

Confidence in local economic conditions remains tentative in the face of continued uncertainty about the business and growth policies of the country’s new leadership. As a result, although respondents describe the current regulatory environment as business friendly both at home and abroad, 84% of executives report an increased focus on regulatory issues in their boardrooms, up from 72% in April.