China’s businesses foresee a bleak year ahead of them and have cut revenue and profit forecasts over concerns of flagging demand and fewer new orders, according to a survey released Monday. The Markit survey showed business sentiment in the nation reached a record low.
Only 17 percent of Chinese businesses surveyed expected an increase in business activity in the next 12 months compared with 25 percent in June. Confidence waned in both the service and manufacturing sectors, according to the report, and the degree of optimism among Chinese companies was well below the global average of 25 percent.
“Worldwide business confidence is at the lowest ebb since the global financial crisis, dragged down by optimism slipping further to six-year lows in both China and India," Chris Williamson, chief economist at Markit, said, in the report.
Employment growth -- an indicator that businesses expect to ramp up output -- also fell to fresh lows in the world’s second largest economy as manufacturers forecast lower head counts for the first time in the history of the survey.
Businesses cited relatively poor market conditions, changes to state policies, exchange rate movements and a lack of capital as threats to growth over the coming year.
Chinese companies could resort to price-discounting strategies in the year ahead to grab precious market share in the face of weak client demand and lower pricing pressures, Annabel Fiddes, an economist at Markit noted in the survey.
Other emerging economies -- such as Brazil, Russia and India -- also echoed China’s gloom, as only 18 percent of businesses in these nations expect business activity to rise by next year, the report said. In India, businesses see a grim 12 months ahead, according to the survey, with only 17 percent of the participants expecting an increase in business activity in the next 12 months -- the lowest since 2009.