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Chinese CEOs more upbeat on growth than peers, survey says
Publication Date : 26-03-2014
Leaders of Chinese companies are more confident about business growth in 2014 than their international peers, and the country remains at the top of the list of investment destinations for global executives this year, according to a PricewaterhouseCoopers survey.
PwC's 17th Annual Global CEO Survey found that 96 per cent of Chinese CEOs are somewhat or very confident of growth in the next 12 months, considerably higher than the global average of 85 per cent.
More than half of the Chinese CEOs expect to add staff in the coming year, with only a handful planning to shed jobs.
At 33 per cent, China is at the top of the list for global CEOs as their most important growth market. Next come the United States (30 per cent) and Germany (17 per cent).
Last year, the top three economies for CEOs were China, the US and Brazil.
The rise of confidence in China's economy is linked to the ongoing global recovery and the continued strong performance of the domestic economy, according to Dennis Nally, PwC's international chairman.
In 2013, China's GDP grew by 7.7 per cent and 13 million jobs were created. The outlook for this year "is equally strong, with China expected to reach its 7.5 per cent growth target", said Nally.
Other international institutions have issued similar assessments. Moody's Investors Service Inc expects China's economic growth to remain relatively robust. It's forecasting expansion of 7.5 per cent in 2014 and 7 per cent in 2015 as the authorities begin to implement the structural adjustment policies.
The rising indebtedness of local governments and companies is expected to weigh on economic activity in the years ahead, Moody's said.
According to the PwC survey, Chinese CEOs identified three major transformation trends: technology, urbanisation and shifts in global economic power.
"CEOs need to think deeply about how they evolve their companies to compete in an increasingly digitally enabled world," said Nally.
"That is not just about how technology changes (companies') relationship to their increasingly mobile, digitally connected customer base, but how technology may affect their business model itself," he added.
The per capita net income of rural residents expanded 9.3 per cent in real terms last year, and the income gap between urban and rural residents shrank.
These trends show that regional disparities are shrinking and opportunities for growth are emerging in the nation's vast hinterlands, according to Nally.
Whereas last year, uncertain growth and inflation topped the list, now CEOs see the increasing tax burden (70 per cent) as the most significant threat to growth, followed by rising labor costs (67 per cent) and volatile capital markets (62 per cent). Excessive regulation is also one of the top concerns.
According to Nally, the shift in concerns reflects the tentative stabilisation of the global economy, as well as the readjustment of the Chinese economy toward consumption-led growth and away from a reliance on investment and exports.
"CEOs will be looking to both drive efficiencies and contain costs, without losing sight of growth opportunities," he said.
The top economic and policy threats mentioned by Chinese CEOs are slow growth in developed economies, a slowdown in high-growth markets and excessive regulation.
As to business threats, bribery and corruption, rising labor costs in high-growth markets and high and volatile raw materials prices are the top three concerns.
Chinese CEOs' business focus is mostly domestic. Compared with their global peers, they are the least likely to be looking for new geographic markets for growth - 5 per cent compared with the global average of 14 per cent - the survey showed.
They were also the least likely to have completed a cross-border merger or acquisition year - 9 per cent compared with 17 per cent of CEOs globally.
The reason for a strong domestic focus, Nally said, is the ongoing reform and opening-up of the Chinese economy, which will bring both opportunity and risk.