Rising business confidence bodes well for full-year growth goal

By Hu Yuanyuan (China Daily) Updated: 2014-06-26 07:03

Demand for loans weakens in the second quarter, says PBOC study

More Chinese entrepreneurs and bankers believe the economy slowed in the second quarter than in the first and demand for loans has weakened, a central bank survey showed on Wednesday.

The "heat" reading of the macroeconomy was down 0.6 percentage point quarter-on-quarter and also down 0.4 percentage point year-on-year, according to the People's Bank of China.

About 36 percent of entrepreneurs said the economy has been cooling in the second quarter, while 62.2 percent said it was at a normal level.

The survey also showed the number of bankers who consider monetary policy was appropriate increased from the first three months of the year.

But according to a report by international accounting firm Grant Thornton LLP, Chinese enterprises' outlook for revenue, profitability, product prices, exports and employment all rose quarter-on-quarter, the firm said in its International Business Report.

Planned investments also rose, indicating much stronger willingness by businesses to expand, the report showed.

"Chinese businesses were rather prudent in the first quarter, especially when it came to making investment plans. Their growth prospects obviously improved in the second quarter, and the country's economic development is expected to regain momentum in the second half of this year," said Xu Hua, chief executive officer of Grant Thornton China.

Second-quarter figures suggest that the economy has stabilized after a package of mini-stimulus measures were introduced by the central government.

The central bank has taken targeted measures to support the economy, including cutting reserve requirement ratios for selected banks, while the government has unveiled a flurry of measures to boost activity in certain sectors, dubbed by some economists as a "mini-stimulus program".

Although businesses' economic outlook didn't change, companies' views of their own prospects improved, according to Grant Thornton. Those expecting an increase of revenue totaled 61 percent (up 30 percentage points), and those expecting stronger profitability totaled 47 percent (up 30 points).

The survey also found that 37 percent of the companies expected higher product prices, 36 percent expected more exports and 36 percent planned to add staff, with all indicators up by at least 20 percentage points over the previous quarter.