The impact of surging COVID 19 cases on economic activity with the lifting of many pandemic control measures has resulted in a drop in China's business confidence since January 2013, according to a survey by World Economics on Monday.
The index dropped to 48.1 in December from 51.8 in November, according to the World Economics'World Economics' survey of sales managers at over 2,300 companies conducted December 1 -- 16. The index was the lowest since the survey began in 2013.
The results of the survey show how business sentiment has taken a hit in the world's second-biggest economy, after the relaxation of strict COVID containment measures on December 7 triggered a growing wave of domestic COVID cases across China.
The growth rate of the Chinese economy has slowed quite dramatically, and could be headed for a recession in 2023, according to World Economics.
China's GDP is expected to grow just 3 per cent this year, its worst performance in nearly half a century.
The sales managers indexes in the manufacturing and service sectors fell sharply in December, with the sales managers indexes in the manufacturing and service sectors both below the 50 level.
More than half of the respondents now state that their operations are being harmed in some way or another, according to the London-based data provider, the proportion of companies that claim to be currently negatively impacted by COVID has risen to a survey high, with more than half of the respondents saying their operations are being harmed by COVID.
China has recently dismantled parts of the world's toughest anti-COVID curbs and lockdowns. The measures were championed by President Xi Jinping but the measures hurt the economy and caused protests that were unavoidable in his decade-long rule.
The top leaders and policymakers will focus on stabilising the economy in 2023 and stepping up policy adjustments to make sure key targets are hit, according to an agenda-setting meeting on Friday.
It may take at least another quarter before things turn around, said Dan Wang, chief economist at Hang Seng Bank China.
Many small businesses have run out of cash, especially restaurants, gyms, hotels and other city services.