China’s CEOs have spoken, and new confidence index shows how multinationals’ hopes turned ‘sobering’ in mere months

Confidence among international businesses in China has significantly dropped in the last six months. An international non-profit organization that researches economic trends has reported that these companies are less interested in investing more money and hiring in China due to slow economic growth and ongoing political conflicts. The Conference Board released a 'Measure of CEO Confidence for China' report, which showed that the confidence score, based on a scale of 100, decreased from 72 to 54 in just half a year. This indicates a slower economic recovery than expected in China. nnDespite the decline, the CEOs in China are somewhat more optimistic than their counterparts in the US and Europe, who have an even less positive view. However, the overall mood among executives in China has become more cautious. They are seeing a significant drop in sales forecasts and are scaling back plans for capital investments and hiring. A substantial number of CEOs believe that if the economic slowdown continues, Chinese policymakers might need to make changes to encourage more market freedom, private sector growth, and openness to foreign investments. nnAnother study by the Peterson Institute for International Economics, based in the US, has highlighted a concerning trend: foreign companies in China are not only holding back on reinvesting their profits but are also selling off their investments to Chinese firms and sending the money back to their home countries. This is a first-time occurrence and has surpassed $100 billion in the first three quarters of 2023. This trend could put downward pressure on the Chinese currency's value and potentially slow down the country's economic growth. The report attributes this shift to increased tensions between the US and China, the shutting down of foreign consulting firms in China, and stricter regulations that make it difficult for foreign businesses to operate smoothly.