China’s corporate performance declines by 4.2 points

April 9th, 2011 - 1:43 pm ICT by ANI  

Beijing, Apr.9 (ANI): China’s National Bureau of Statistics (NBS) has said the Business Climate Index, the main indicator of corporate performance, has declined by 4.2 points to 133.8 in the first quarter of 2011, from a three-year high of 138 in the last quarter of 2010.

A statement based on a survey of 20000 Chinese companies posted on the NBS website says that even though the index shows a decline, it still showed signs of economic expansion.

The Business Climate Index is a measure, which reflects the macroeconomic outlook and the trend of future developments. A reading above 100 indicates economic expansion, while one below 100 suggests contraction.

The retreat signals concerns about the country’s monetary tightening policy and interest rate rises, China Daily reports.

The NBS sub-index for the real estate industry has decreased the most among all the surveyed sectors to 135.3 in the first quarter of 2011, from 148.4 in the fourth quarter of 2010, according to the statement.

A separate report from HSBC Holdings Plc has stated that the increasing cost of borrowing money may slow the pace of economic growth, and increase pressure on Chinese companies.

Nine consecutive rises in the required reserve ratios for banks since the beginning of 2010, mean that companies are finding it increasingly difficult to borrow money from banks, especially small- and medium-sized operators, said Li Xunlei, chief economist at Guotai Junan Securities Co Ltd.

“Small- and medium-sized enterprises will be affected the most by the tight monetary policy,” he added.

According to the NBS figure, the sub-index for small companies fell to 114.1, two points lower than the last quarter of 2010. The measure for medium-sized companies was 133.5, and 157.2 for large businesses.

The business climate sub-index for the retail sector came in at 153.2, a rise of 3.6 points from the last reading, the highest among all industries.

In the IT sector, the measure decreased to 150.4 in the first quarter from the previous figure of 159.7.
Another business performance indicator, the Index of Entrepreneur Confidence, was also released by the NBS on Friday, which states that the figure for the first quarter was 137.4, unchanged from the last three months of 2010. (ANI)

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