23 September 2014

A recent China Economic Sentiment Survey conducted by the professional accounting body CPA Australia indicates that many leading accountants and business professionals working in China are optimistic about the prospects for China’s economy and their own business in 2015. 

When estimating China’s GDP growth rate for 2014, 45 per cent of respondents expect a final reading of between 7 and 7.49 per cent. On the Consumer Price Index (CPI) for 2014, over three quarters (80 per cent) expect it to increase between 2 and 2.99 per cent from 2013.

The survey respondents ranked retail and consumer (39 per cent), telecom, media and technology (36 per cent), and financial and banking services (32 per cent) as the sectors expected to contribute most to China’s economy in 2015.

The main economic challenge facing China’s economy in 2015 was considered the downturn in the property market (47 per cent). In terms of what respondents see as the greatest risks facing their enterprise, over two thirds (67 per cent) believe that rising operating and labour costs is the greatest risk, followed by a slowing domestic economy (61 per cent).

“The figures indicate that China’s business leaders are confident about the year ahead, however they are cautious, given the challenges that face the economy, such as the decline in the property market. Almost half (47 per cent) of the respondents declared some form of confidence in next year’s economy while only 10 per cent had a pessimistic view. The Government has implemented a number of encouraging tax incentives for specific sectors, such as technology, which should continue to support the country’s economic growth in 2015,” said Mr Kevin Ng, North China Committee President of CPA Australia.

“The survey results show that there is still uncertainty on the economic and political reforms taking place in China so it is a crucial time for the Government to recognise and drive the economy in order to provide future stability,” continued Ng.

Over half (53 per cent) of the respondents expect their enterprise’s sales revenue generated in China to be higher in 2014 than 2013, and 65 per cent expect to see their company’s capital expenditure in China increase compared to 2013, this further highlighted the cautiously optimistic business sentiment. 

When compared to 2013, 37 per cent of respondents believe investment opportunities in China will improve, while 38 per cent believe the landscape will remain the same. Almost a third of respondents (30 per cent) stated that their company has increased their investment overseas in the past 12 months, while 41 per cent stated their company will consider investing overseas in the next 12 months. 

Free Trade Agreement with Australia
When asked about when the proposed Australia-China Free Trade Agreement will be concluded, 44 per cent of respondents believe the agreement will be concluded before the end of 2014. Just over four in ten (42 per cent) of respondents think that the mining and energy sector will benefit the most from the agreement, and 84 per cent agree that it will facilitate the acceleration of the internationalisation of the RMB. 

“China and Australia share a strong and rapidly growing trade and economic relationship and, as the largest two-way trading partner, China is vital to the future prosperity of Australia. We hope that an agreement can be made soon so that both economies can benefit from increased investment and trade, and also improved efficiency,” said Mr Kevin Ng, North China Committee President of CPA Australia.

Shanghai Free Trade Zone
A third (33 per cent) of the respondents stated that their company has undertaken business activites in the Shanghai Free Trade Zone (FTZ). The top two benefits to company operations of the Shanghai FTZ identified by respondents were higher efficiency in cash management between domestic and overseas businesses (56 per cent), and fewer restrictions on cross border investments (55 per cent). 

“A year after its introduction, it is positive to see that the Shanghai FTZ has attracted and continues to attract global MNCs and finance companies, however further clarification on the regulatory frameworks would enhance interest levels and further bolster activities in the special economic zone,” said Mr Danny Tong, East and Central China Committee President of CPA Australia.

Economic Zones in Pearl River Delta
When asked about the potential impacts of the three key strategic development zones in the Pearl River Delta (Qianhai, Hengqin and Nansha) on the nation’s economy, respondents believe the zones will encourage greater foreign direct investment, accelerate China’s financial reform and increase exports. 

“It will be interesting to monitor the success of these three strategic development zones and the impact they have on China’s economy. The zones should help the internationalisation of RMB, attract foreign direct investment, and increase trade with China’s major trading partners – all bolstering the economy,” said Mr Peter Kung, South China Committee President of CPA Australia.

Other interesting findings from the survey included:

A majority of respondents (80 per cent) expect a salary increase in 2015, with over a third (36 per cent) expect an increase of between 6 and 10 per cent. Businesses in China are most likely to increase their current head count (52 per cent) in 2015.

CPA Australia conducted the survey last month on the general sentiment of China’s economy with 227 of its members including finance and accounting professionals from listed companies, multinational corporations, private enterprise, government and not-for-profit organisations.

CPA Australia is one of the world's largest accounting bodies with 150,000 members globally. It has established a strong membership base of more than 15,000 in the Greater China region.

Released by Racepoint Global on behalf of CPA Australia. 

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Lina Bai
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Joyce Yin
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