News stories about the gloomy outlook for the Chinese economy after its decades-long rapid growth have been coming out one after another. Korean media have been paying significant attention to the latest change in the Chinese economy. Local business newspapers and online media, such as Financial News, Choice News and Acrofan, have quoted the CKGSB Business Conditions Index (BCI) in their reports about the economic slowdown in China. The use of the index in their coverage of the economic conditions in China has helped both the CKGSB and the index build a strong reputation for expertise and reliability.
From left to right: Logos of Financial News, Choice News, and Acrofan
The index fell to an all-time low in September since its inception. Local media said that the escalated trade war between the US and China with new tariffs on their respective imports dragged down the CKGSB BCI to the lowest level. Also, China’s sluggish economic performance, recently verified by its GDP growth slowing to 6.5% in the third quarter, has sounded an alarm in the rest of the world as a slowdown in China could be a risk to the global economy.
Furthermore, one of the local media outlets quoted the BCI to describe worsening economic conditions that even Chinese companies, which have shown considerable performance up until now, are currently facing. Besides the official statistics released by the Chinese authorities, there are several cases that help identify a trend in the business conditions for companies in China. The media outlet noted that a survey conducted by a private organization of authority offered an unusual opportunity to indicate that even well-performing companies in China are damaged by trade war and China’s slowing economy, emphasizing the meaning of a fall in the CKGSB’s index. It then assumed that damage would be more serious to other overall private companies, given the fact that CKGSB alumni entrepreneurs surveyed are running high performing companies.
Meanwhile, the CKGSB BCI comprises four sub-indices for corporate sales, corporate profits, corporate financing environment and inventory levels, three of which measure future prospects and one, the corporate financing index, measures the current situation. The index takes 50 as its threshold, so an value above 50 means that the variable that the index measures is expected to increase, while an index value below 50 means that the variable is expected to fall. The CKGSB BCI uses the same methodology as the PMI index.
Li Wei, a professor of economics at the CKGSB said, “Most of companies surveyed are experiencing an unprecedented level of difficulties and show a gloomy outlook for their business in the next six months.” Meanwhile, the BCI, which measures the real conditions of the Chinese economy every month, is emerging as an independent source of data to monitor the macro economy of China other than the official statistics released by the National Bureau of Statistics of China.
To read one of original Korean articles, which is available in print by Financial News, please click here.