Chinese Business Confidence Plunges in Fourth Quarter

Chinese business confidence plunged in the final three months of 2008 as the mounting effects of the financial crisis weighed on exports and industrial output, an official survey showed on Friday.

Eugene Hoshiko / AP

The business confidence index fell 29.2 points in the fourth quarter to a record low of 94.6, the National Bureau of Statistics said.

Hardest hit were manufacturers, hurt by shriveling demand in the United States and Europe and a weakening domestic property sector. Their sub-index plummeted 32.1 points from the third quarter to 87.2.

That reading is in line with two purchasing managers' indexes published earlier this month, which showed a continued contraction in the sector, as well as economists' expectations that exports shrank more quickly in December.

The bureau surveys 19,500 enterprises of all types to compile the index, which is meant to represent firms' views on the overall economic environment and macroeconomic policy.

Figures above 100 represents positive sentiment, while those below 100 signal a deteriorating outlook.

The outlook for the transport, storage and postal sector also worsened sharply, with its sub-index falling 28.1 points to 95.6.

The agency did not publish the sub-index for the beleaguered property sector, which in the third quarter fell by 22 points to 96.4, the lowest reading of any sector.

The fall in confidence came despite a barrage of moves by authorities to prop up economic growth, including announcing a 4 trillion yuan ($585 billion) stimulus package and repeated cuts in interest rates.

The business climate index, a separate measure of the state of various industries and their outlook, fell 21.6 points to 107.0 in the fourth quarter, the statistics agency said.

That fall was also led by manufacturing, the sub-index for which fell 27.3 points to 98.5.

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