China SMEI: Credit conditions cease to deteriorate – Standard Chartered

Lan Shen, Economist at Standard Chartered, notes that China’s SMEs continue to face a difficult time as the headline SMEI (Bloomberg: SCCNSMEI <Index>) – based on their monthly survey of more than 500 SMEs – edged up to 54.7 in November from 54.5 in October.

Key Quotes

“This was mainly driven by the ‘credit’ sub-index, which picked up to 52.8 from 50.5 prior, while both the ‘current performance’ and ‘expectations’ sub-indices weakened further.”

“Our November survey showed that SMEs’ real activity weakened as the business outlook stayed downbeat. This was reflected in sluggish domestic sales, poor investment appetite, falling financing demand and softer hiring.”

“Unprecedented policy support for SME financing prevented credit conditions from deteriorating further.”

“After the authorities’ recent announcement of a series of measures addressing financing for SMEs and private firms, our surveyed SMEs expect a further improvement in financing costs via both the bank and non-bank channels, according to our survey.”