CKGSB Knowledge Authors

CKGSB Business Conditions Index for August 2016: Optimism prevails, but is on the wane

September 05, 2016

Business Conditions Index for China, July 2016

Despite a small dip, the next six months are viewed with a degree of optimism. But it is also noteworthy that the BCI has now fallen for five months in a row.

The CKGSB Business Conditions Index (BCI) registered 54.5 in August, slightly less than July’s 56.3. Despite a small dip, this shows that for CKGSB’s sample, which represents relatively successful businesses in China, the next six months are viewed with a degree of optimism. But it is also noteworthy that the BCI has now fallen for five months in a row. The BCI comprises four sub-indices: Corporate sales and inventory levels rose slightly, the latter surpassing the threshold of 50. The corporate profits index dropped by close to five points, but remains above 50, and the financing environment remained below 50.

The BCI, directed by Li Wei, Professor of Economics at the Cheung Kong Graduate School of Business, asks respondents to indicate whether their firm is more, the same, or less competitive than the industry average (50), and from this we derive a sample competitiveness index. As our sample firms are in a relatively strong competitive position in their respective industries, the CKGSB BCI indices tend to be higher than government and industry PMI indices.

CKGSB Business Conditions Index

In July, labor costs fell slightly and overall costs expectations also fell slightly, but these two indices are both still over 80.

Labor cost Index
Labor Cost Index

Price indices for producer and consumer goods moved in entirely different directions during the month, with the consumer goods index rising from 46.9 to 56.1, while the producer goods index fell sharply from 40.3 to 32.9. Chinese firms are facing some issues: cost inflation is growing apace and while consumer prices have recovered slightly, it is unclear whether that recovery can sustain its momentum. However, in the face of adversity, our sample firms continue to recruit and invest. Regardless of the macroeconomic conditions over the past five years of the BCI, the Chinese firms sampled have prioritized corporate investment and recruitment, providing a conundrum for observers.

Producer&Consumer price
Producer&Consumer Price Index
Investment Index
Investment Index
Recruitment Index
Recruitment Index

Enjoying what you’re reading?

Sign up to our monthly newsletter to get more China insights delivered to your inbox.

Our Programs

Building Digital Ecosystems

Jointly offered by CKGSB and IMD Business School, this program offers a comprehensive understanding of successful digital ecosystems from both China and the USA through the latest case studies and cutting-edge research.


DateNov 6-10, 2023


Learn more

Luxury Management: Food, Fashion & Furniture

Global Unicorn Program Series

Co-developed by CKGSB and SDA Bocconi School of Management, this program unravels luxury management—particularly in the food, fashion and furniture sectors—and emerging technologies, such as Fintech and AI.


DateNov 13-16, 2023


Learn more

Emerging Tech Management Week: Silicon Valley

Co-developed by CKGSB, UC Berkeley College of Engineering, and IE Business School, this program equips participants with proven strategies, cutting-edge research, and the best-in-class advice to fuel innovation, seize emerging tech developments, and catalyse transformation within their organization.

LocationBerkeley, USA

DateNov 5-11, 2023


Learn more

Frontiers in Social Innovation

Global Unicorn Program Series

In collaboration with the Stanford Center for Professional Development (SCPD), this CKGSB program equips entrepreneurs, intrapreneurs and key stakeholders with the tools, insights, and skills necessary to lead a new generation of unicorn companies.

LocationStanford, California, USA

DateDec 11-15, 2023


Learn more