About the CKGSB Business Sentiment Index
CKGSB’s Center on Finance and Economic Growth surveys more than 2,000 Chinese companies from within the industrial sector every quarter to provide the most comprehensive set of independent data currently available. Led by CKGSB Professors of Finance Gan Jie and Erica Xuenan Li, this large-scale, micro-level quarterly company survey on China’s industrial economy, which began in 2014 Q2, sheds light on how the sector is coping and what types of reforms are needed—based not on opinion, but on a painstaking, fact-gathering process.
Described as the first of its kind, this survey is based on stratified random sampling by industry, region and size from the National Bureau of Statistics’ population of 488,000 industrial firms that have sales of over five million RMB. The survey has around 2,000 responding firms each time.
Each quarter, the professors reveal their survey findings, which are often surprising, given the usual themes found in the media today. They then outline some policy recommendations which are necessary to deal with the problems exposed by the survey’s data.
Latest survey results
The Q2 2025 CKGSB Business Sentiment Index Report (BSI) saw Chinese companies were put to a test amid tariff headwinds.
In April, the Trump administration announced tariffs on key industries such as new energy and high-end manufacturing in China, sending shock waves to the global supply chain as the scope and scale of the tariffs exceeded market expectations. The U.S. and Asian stock markets experienced brief fluctuations. And the RMB and commodity prices also saw volatility. Although the Federal Reserve extended expectations of rate cuts around midyear, providing some buffer for global liquidity, this adjustment in tariff policy is enough to put entrepreneurs back on edge.
China’s domestic economy is also in a delicate rebalance.
The consumption post the Spring Festival in China has been recovering at a slower pace than expected, and the adjustment in the real estate market continues to weigh on confidence across the supply chain in the country. Local governments are ramping up investment in infrastructure, green energy, and the digital economy, while the central government has frequently sent policy signals of support. Yet, businesses remain cautious.
The Q2 report of the BSI released by Cheung Kong Graduate School of Business (CKGSB) captures the true mindset of enterprises in China in the second quarter:
Key Statistics of the Business Sentiment Index in Q2 2025
| Index | Q1 | Q2 | Change | Notes |
| Business Sentiment Index | 55 | 54 | ↓1 | The index had a slight decline from the previous quarter but the overall steady. |
| Operating Conditions Diffusion Index | 66 | 64 | ↓2 | The operation fell slightly but remained strong. |
| Expected Operating Conditions Diffusion Index | 49 | 50 | ↑1 | The index rebounded to the boom-bust threshold, showing cautious optimism. |
| Investment Timing Diffusion Index | 51 | 49 | ↓2 | The index fell below the boom-bust threshold, signaling subdued confidence. |
Other Statistics of the Business Sentiment Index in Q2 2025
| Index | Q1 | Q2 | Change | Notes |
| Production Diffusion Index | 45 | 46 | ↑1 | The index had a slight decline from the previous quarter but the overall steady. |
| Finished Goods Inventory Diffusion Index | 44 | 45 | ↑1 | The index fell slightly but remained strong. |
| Cost Diffusion Index | 64 | 59 | ↓5 | The index rebounded to the boom-bust threshold, showing cautious optimism. |
| Price Diffusion Index | 51 | 47 | ↓4 | The index fell below the boom-bust threshold, signaling subdued confidence. |
| Firms with New Loans (%) | 4.0% | 2.8% | ↑1.2% | The index rebounded to the boom-bust threshold, showing cautious optimism. |
| Lending Attitude Diffusion Index of the Banking Sector | 100 | 100 | No. | The index fell below the boom-bust threshold, signaling subdued confidence. |
Overall, business sentiment in China in the second quarter of 2025 showed three characteristics:
- Business was manageable— Businesses saw their operating conditions edging down slightly but stable overall. Core industries provided support to China’s economy, which hasn’t seen signs of systemic decline yet.
- Business outlook was promising — The expected operating conditions diffusion index has climbed back above the boom-bust line, indicating that policy support and regional market recovery have shown some optimism.
- Corporate investment remained cautious — The investment timing diffusion index has fallen again, with the share of companies taking on new loans dropping to 2.8%, reflecting a clear stronger wait-and-see attitude.
The full survey can be downloaded via the links below.
For more information, or to arrange an interview with the professors, please email Xuefang Tian (Julie) at xftian@ckgsb.edu.cn.
