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A weak start to Chinese SMEs in Q3

THE performance and outlook of China’s small and medium sized enterprises started the third quarter on a weaker footing, and their performance in most regions weakened in July than a month ago, except for central-western China, according to a survey today.

The Small and Medium Enterprise Confidence Index  for China by Standard Chartered, an index to measure vitality in SMEs, was unchanged at 57.3 in July after falling for three consecutive months in the second quarter, reflecting a week start to the third quarter for SME activity.

Although the index remained unchanged in July, it still indicated subdued activity with sluggish demand and rising inventories continuing to hamper a pick-up in real activity among SMEs. 
A reading above 50 means an expansion. 

Two of the three key sub-indices weakened in July. Operational conditions fell for the third straight month, while business expectations grew at a slower pace for both current and future activity. 
One positive point was the credibility, which continued to improve and suggested stronger ability among SMEs to pay debt.
The recent improvement in economic growth momentum, driven by policy easing since late 2014, has not trickled down sufficiently to SMEs yet. 
“We expect the authorities to maintain a policy easing bias in the coming months,” the survey  said. “We forecast another 1 percent of reserve requirement ratio  cut by the end of 2015, together with more targeted measures to support real activity.”




 

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