Recent surveys have shown that the confidence of multinational corporations, mainly European and American companies, in China has dropped to its lowest point since the outbreak of the pandemic. Their outlook on their industries and company performance in China appears more pessimistic.
According to a survey conducted by the Conference Board, a US think tank, the emotional outlook of chief executives of multinational companies in China in the second half of this year has decreased to 49 points, down from 56 points in the first half of the year. A reading above 50 indicates optimism, while below that value indicates pessimism.
More than 40% of the interviewed chief executives stated that the current business environment in China is worse than six months ago. 38% of chief executives believe that the situation has remained unchanged.
Chief executives remain cautiously optimistic about the economic outlook for the next six months, but their outlook on their industries and company performance appears more pessimistic, including decreases in sales, profits, investments, and workforce.
Most chief executives noted that as companies face downward pressure on profits, customers have become extremely price-sensitive, seeking significant discounts or delaying purchases.
Furthermore, 56% of chief executives highlighted that the actions of local competitors have exacerbated this situation. They believe that local competitors are more agile in responding to market changes and offer comparable or superior products at lower prices.
The survey was conducted from September 30 to October 28. Prior to this, the Chinese government had announced measures to support growth, including interest rate cuts.
This survey highlights ongoing concerns about the Chinese economy this year, particularly as it was conducted before the election of Donald Trump as US president, who threatened to impose tariffs on Chinese goods after taking office.