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Business confidence and conditions on the up

CHINESE business confidence rose in the second quarter while business conditions also improved, according to the National Bureau of Statistics today.

The business confidence index settled at 110.2 in the second quarter - an area of "positive attitudes" - up 9.1 points from a quarter earlier.

The business conditions index increased 10.3 points from the January-March period to 115.9 in the second quarter, also indicating "expansion."

Readings above 100 show a positive result.

"Both figures reflect the upward trend in the Chinese economy. The rising confidence is crucial to sustain development while the country's still loose policies can create a supportive environment for business to grow," said Li Maoyu, an analyst at Changjiang Securities Co.

China's new yuan-backed loans rocketed to 1.53 trillion yuan (US$224 billion) in June, more than double the 591.8 billion yuan of loans in May and pushing the total amount in the first half to a record 7.37 trillion yuan.

China adopted a proactive fiscal and monetary policy stance last November and introduced a 4-trillion-yuan package to stimulate the economy and counter the global financial crisis.

Among the 19,500 entrepreneurs interviewed, managers in the manufacturing, property and catering sectors were more upbeat. The confidence index of property entrepreneurs improved 26.7 points to 116.7 while that for the construction sector settled at 126.2.

Entrepreneurs in state-owned companies and foreign-invested ones were also optimistic, with their confidence index readings at 109.8 and 112.9 points respectively.

Better business conditions in the second quarter laid the foundation for the growing confidence. The index showed great advances in industries involving manufacturing, construction and property in line with the trend reflected by the confidence index.

In particular, the property sector gained 18.7 points in the second quarter after contractions for five consecutive quarters previously. It returned to expansionary territory in the second quarter after being negative in the first quarter.

The industrial sector also came back into positive turf, with the index standing at 112, up 12.2 points from the previous quarter.

China's industrial output posted a better-than-expected growth of 8.9 percent in May, quicker than the increases of 7.3 percent in April and 8.3 percent in March after the country's stimulus package started to gain traction.


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