Chinese business confidence falls to one-year low: S&P Global
The net balance of Chinese firms that expect business activity to expand over the next year fell from 17 per cent in February to 11 per cent in June. This marked the lowest degree of confidence since June 2024 and was among the lowest on record. Additionally, optimism in China was below the global average of 24 per cent and the weakest of the BRICS nations, S&P Global said in its latest China Business Outlook survey.
Chinese business confidence weakened in June 2025, with the net balance for future output falling to 11 per centâ€'its lowest since June 2024. Firms expect modest price hikes amid rising competition and cost control through staff cuts. Profit outlook turned negative, and capex and R&D projections hit record lows. Despite challenges, growth is still expected, supported by government policies.
Business confidence among Chinese companies has weakened in June 2025, with both manufacturing and services sectors reporting a broad-based easing in positive sentiment. The manufacturing sector posted a net balance of 7 per cent, while services stood at 15 per cent, signalling moderation in expectations for future activity.
Key concerns include global trade policy uncertainty and a subdued economic environment, which companies believe will generate weak demand in the year ahead. Firms also cited intense market competition and rising input costs as major headwinds to growth. Despite this, businesses expect government support and improved financial conditions to aid performance, along with enhanced R&D efforts and a potential recovery in domestic demand.
Employment outlook has deteriorated significantly, with the net balance falling from −1 per cent in February to −3 per cent in June—marking the lowest level since February 2020. Both manufacturers (−3 per cent) and service providers (+3 per cent) expect staff reductions, indicating the first broad-based job shedding forecast in over five years.
Capital expenditure and R&D projections have also hit record lows. The net balance for anticipated capex fell to +2 per cent from +7 per cent in February, the lowest since comparable data began in October 2009. R&D intentions dropped to +5 per cent, the weakest since tracking started in February 2019, added the survey.
Cost pressures, however, are forecast to ease. Input and output prices are still expected to rise, but at slower rates. The net balance of firms expecting higher staffing costs stood at +5 per cent—its lowest since records began in 2019—while non-staff cost expectations fell to a nine-year low of +5 per cent. Selling price expectations have softened considerably, with only a net balance of +1 per cent planning price hikes, the lowest since February 2024.
Profit outlook has turned negative. With limited room to raise selling prices, the net balance for profitability dropped to −1 per cent in June from 5 per cent in February, the weakest reading since June 2024 and well below the global average of 8 per cent.
'A further loss of confidence was observed among Chinese firms at the end of the first half of 2025. Optimism regarding future output slipped to the lowest level since last June, with sentiment among manufacturers at a more subdued level compared to their services counterparts,' said Jingyi Pan, economics associate director at S&P Global Market Intelligence.
'Despite expectations for slower cost increases, including via the management of salary outlays by reducing headcounts, Chinese businesses turned pessimistic regarding profitability in the year ahead. This reflected the challenges that companies anticipate regarding global trade and the ensuing impact on demand,' added Pan. 'Overall, growth is still expected in the year ahead among Chinese firms as supportive policies and investment into new product launches are forecasted to drive sales. Even as firms planned to lower staffing levels, capital expenditure and R&D spending are reportedly set to continue growing, the latter at a rate that that remains above the global average.'
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