China’s SMEs Show Improved Performance in January

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China’s small and medium-sized enterprises (SMEs) demonstrated a positive uptick in business performance in January, according to the latest industry index released on Wednesday.

The Small and Medium Enterprises Development Index, compiled from a survey encompassing 3,000 SMEs across eight major industries, registered a reading of 89.2 last month. This marked an improvement from the previous month’s figure of 89 and reflected a higher reading compared to the same period last year, as reported by the China Association of Small and Medium Enterprises.

The rise in the index was attributed to accelerated production activities at the onset of the year and a surge in consumer demand in anticipation of the upcoming Spring Festival, as highlighted in the association’s report.

The implementation of pro-growth policies has also played a significant role in boosting companies’ confidence in the future outlook, the report emphasised. Specifically, the sub-index measuring SMEs’ confidence in the macroeconomy rose to 98.8, up from 98.5 in the previous month.

Moreover, the report noted a noticeable increase in market vitality, with the sub-index for market vitality climbing to 81.2 from 80.8 recorded a month earlier. This resurgence in domestic demand ahead of the festival period contributed to the positive momentum observed in the market.

However, despite the encouraging signs of improved market demand and sales performance, SMEs continue to grapple with high operating costs, underscoring persistent challenges within the sector.

The SME Development Index, comprising various sub-indexes to assess the performances and expectations of SMEs, serves as a crucial indicator of the sector’s overall health. A reading above 100 signifies an upward trajectory in business activity, while a reading below 100 indicates subdued vitality, according to industry experts.