Recovery of China's SMEs continues to slow

China's Small and Medium Enterprises Development Index stood at 87.0, down 0.2 of a percentage point from last month, declining for the fourth straight month, indicating their recovery continues to slow, according to the China Association of Small and Medium Enterprises on Monday.

The SMEDI is a business index ranging from 0 to 200 with 100 the critical value showing the business situation is little changed. Values that fall between 0 and 100 show business is in decline. The value between 100 and 200 shows business is in the ascent.

From the industry perspective, transport and logistics (up 0.4 percentage points), wholesale and retail (up 0.3 percentage points), social services (up 0.3 percentage points), information transmission and software (up 0.4 percentage points) climbed from last month. Catering services held the line and industrial engineering (down 0.5 percentage points), construction (down 0.6 percentage points) and real estate (down 0.5 percentage points) dropped from the previous month. Values in a total of eight industries were recorded below 100.

From the factors' perspective, the labor index turned to a decline from a rise, the fund index dived from flat, macroeconomic sensitive (feelings and views from firm owners on the macroeconomy) index, and cost index maintained a declining trend. But they were still higher than the critical value. The investing index rallied, general operating index, market index and profit index went down from last month, and the four factors were all lower than the critical value.

From the regional perspective, the SMEDI in East, Central, West and Northeast China registered at 87.8, 88.5, 87.8 and 83.4. The northeast saw the largest rise, the central the largest drop.

The China Association of Small and Medium Enterprises said the business confidence of small and medium-sized enterprises had room to firm up in July, their market perspective fell and costs rose. A tight budget situation was gaining ground. The labor supply rose but demand dropped. Although investment willingness rebounded to some extent, differentiation of business performance among industries intensified.