"The survey result is very consistent with our observations in the daily business," says Juliette Xue Lascoux, General Manager of SEB Shanghai. "While the economy shows certain cyclical variations, there are a number of long-term structural issues remaining that undermine the business confidence. For foreign companies, their China business is challenged by increasing local competition combined with lukewarm domestic demand and uncertainty in the regulatory space. Most companies have already incorporated geopolitical risks into their China business calculation but the coming US election later this year has escalated that concern further in this survey."

All four components of the index (order intake outlook, investment outlook, staffing outlook, and profit outlook) showed an improvement in June compared with the previous survey. However, the outlooks for staffing and order intake still remain below their historical averages. The mild recovery may indicate further upside for the economy in the medium term, supported by central bank open market operations and interest rate cuts.

Companies expect some improvement in their overall performance. In terms of the sales outlook, 42 per cent of respondents expect sales growth to hover around +/- 5 percent in the next six months, while 17 per cent of respondents now expect sales to decline by as much as 20 per cent. Regarding the profit outlook, 47 per cent of respondents expect profit growth to be around +/- 5 per cent in the coming six months while the share of companies expecting profit growth of more than 20 per cent rose to 6 per cent. While confidence remains subdued, the survey suggests some improvement in sentiment. 

Investment and staffing indices have both improved. A total of 40 per cent of respondents have plans to either majorly or modestly invest, and the share of respondents expecting to increase headcount has risen to 36 percent from 30 per cent in the previous survey. 

The survey also showed that among the issues negatively affecting corporates, weak customer demand remains a top concern. While 39 per cent of respondents remain concerned about weak customer demand, the proportion has fallen from 53 per cent. Meanwhile, geopolitics and local competition are still considered major concerns. The share of respondents identifying geopolitics as a concern rose to 21 per cent from 16 per cent, partly explained by the US election cycle and its possible effect on US-China relations.

About the survey
SEB's China Financial Index was first launched in 2007 and is based on input, in this edition, from CEOs, CFOs or Treasurers at 66 subsidiaries of major Swedish, Finnish, Norwegian, Danish, German, British and Swiss companies. Most of the surveyed companies have a global turnover above EUR 500m. The survey is web-based and confidential and was carried between 8 July and 22 July 2024.