Commenting on the survey results, Prof Gan Jie said, "Weak demand and overcapacity remain the biggest challenges facing the industrial economy, with the prevalence and severity of overcapacity both at historically high levels. On the positive side, however, after five quarters of persistent decline, production has stabilized due to an expansion in consumer goods."
Prof Gan continued, "In contrast to conventional wisdom, our industrial survey has consistently found, since its inception in the second quarter of 2014, that financing is not a bottleneck for the industrial economy. Only 4% of firms cited financing as a constraining factor in Q3."
Prof Gan added that monetary policy cannot revive the industrial economy, but stressed that supply-side reform, with a focus on reducing overcapacity and improving industrial structure, is necessary for the long-term growth of the Chinese economy. However, she said that, despite short-term challenges, several growth areas such as the rise of the service sector, internet-related businesses, the reform of state-owned enterprises and urbanization all point towards a positive long-term outlook for the Chinese economy.
Meanwhile, another independent survey from the Beijing-based school, the CKGSB Business Conditions Index (BCI), registered 60.8 in November, a slight improvement on October's overall index of 58.5, but both well above the confidence threshold of 50. The BCI has been climbing for three straight months, which shows that for CKGSB's sample of relatively successful businesses operating in China, the next six months are increasingly viewed with optimism.
Launched in June 2011 under the direction of CKGSB Economics Professor Li Wei, the CKGSB Case Center and the Center for Economic Research initiated a project to gauge the business sentiment of executives -- the majority of whom are current or former students at CKGSB -- about the macro-economic environment in China.
During each survey, respondents are asked to indicate whether certain aspects of their business are expected to increase, remain unchanged, or decrease over the forthcoming six months as compared to the same time period last year. The diffusion index is calculated by summing the percentage of "increase" responses and half of the "remain unchanged" responses.
The CKGSB BCI comprises four sub-indices for corporate sales, corporate profits, corporate financing environment and inventory levels. In November, all four of these sub-indices rose. Of these, corporate sales rose slightly from 74.0 to 77.5, while corporate profits rose from 61.8 to 64.3.The financing environment index also rose in November, from 48.4 to 48.5, but remains below the confidence threshold of 50, while the inventory index rose from 48.8 to 51.9, crossing the confidence threshold.
Commenting on the survey results, Prof Li said, "Inventory levels remain a significant issue for the economy, with the index having lingered below the confidence threshold of 50 for much of the past five years. Meanwhile, the financing environment for the BCI sample is less than optimal, and, given that our sample consists mainly of the leading powerhouses in the economy, SMEs, this is a critical issue for economic reforms going forward."
At a time when trustworthy data on China is increasingly hard to come by, these surveys from China's leading independent business school, CKGSB, provide timely and reliable facts, as well as objective analysis on the Chinese economy.
Established in Beijing in November 2002 with support from the Li Ka Shing Foundation, Cheung Kong Graduate School of Business is China's first faculty-governed and independent business school. CKGSB boasts more than 40 full-time professors, who have earned their PhDs or held tenured faculty positions at leading schools such as Harvard, Wharton and Stanford. Their research has provided the basis for nearly 400 case studies of both China-specific and global issues. CKGSB also stands apart for its unmatched alumni network. More than half of CKGSB's 10,000+ alumni are at the CEO or Chairman level and, together, their companies accounted for one sixth of China's GDP in 2015.
CKGSB is located in Beijing, Shanghai, Shenzhen, New York, Hong Kong and London. The school offers the following innovative courses: MBA, Finance MBA, Executive MBA, Business Scholars Program (DBA) and Executive Education programs.
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