Chinese Business Confidence Drops to Lowest in a Year: S&P Global Survey

Business sentiment among Chinese firms fell sharply in June 2025, reaching its lowest level since June 2024, according to the latest China Business Outlook survey by S&P Global Market Intelligence. The report indicates a broad-based decline in optimism across both manufacturing and services sectors amid concerns over global trade policy uncertainty, weak demand, and rising competition.

The net balance of firms expecting business activity to expand over the next 12 months dropped from 17% in February to 11% in June, well below the global average of 24% and the weakest among BRICS nations. Manufacturers reported a net balance of just 7%, while service providers stood at 15%.

Profit expectations also turned negative for the first time in a year, falling from a net balance of +5% to -1%. The weakened outlook is attributed to limited pricing power and concerns over subdued economic conditions, prompting companies to trim costs through staff reductions and restrained investment.

The employment outlook showed significant deterioration, with the net balance declining from -1% in February to -3% in June — the lowest since February 2020. This marks the first time in over five years that both manufacturers and service providers forecast workforce reductions.

Capital expenditure projections have hit a historic low, falling to +2%, while R&D spending intentions also weakened to +5% — the lowest levels since records began in 2009 and 2019, respectively. However, Chinese firms still anticipate modest growth in R&D to support new product launches and sales, albeit at a reduced pace.

Despite the downturn in confidence and profitability, companies expect some relief from easing cost pressures and potential government support. S&P Global’s Associate Director of Economics, Jingyi Pan, stated: “A further loss of confidence was observed among Chinese firms at the end of the first half of 2025… While growth is still expected, firms anticipate challenges from global trade disruptions and weak domestic demand.”