Chinese businesses are positive over prospects

Analysis

Chinese business confidence edged up in the first quarter despite worsening inflation and tighter credit control, said the National Bureau of Statistics.

The business confidence index remained in the “prosperous” category as it hit 140.6 in the first three months of this year. It was a rise from 139.6 in the previous quarter.

“Most entrepreneurs remain confident and have positive expectations over the current and future macroeconomic development,” said the bureau.

It interviewed 19,500 entrepreneurs in all types of business and found 56% of respondents are optimistic about prospects for their industry's development in 2008 and 61.1% deem their business will do well this year.

Respondents involved in construction, transport, postal, telecommunications and catering sectors were more confident compared with the previous quarter while the index for industrial, wholesale and retail sectors showed little changes. The index to track confidence in the real estate industry fell 6.8% to 131.1.

“It shows long-term confidence among managers. However, they should be prepared for higher costs and tighter credit control in China due to inflationary pressure,” said Li Maoyu, an analyst with Changjiang Securities Co.

China's producer prices, the factory-gate gauge of inflation, rose 6.6% to a record high in more than three years in February.

It is also likely for China to raise interest rates or reserve requirement ratio in the future after similar moves last year to fight inflation.

But China's economic growth is seen to remain positive as the World Bank estimated a 9.4% expansion in its economy this year while the Manila-based Asian Development Bank predicted 10%. (Shanghai Daily)

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