Business confidence in China’s Greater Bay Area reached multi-year highs in the third quarter of 2025, according to the latest Standard Chartered Greater Bay Area Business Confidence Index (GBAI) released jointly with the Hong Kong Trade Development Council (HKTDC). The survey, conducted from early August to early September, indicated a broad-based recovery in sentiment, attributed to diminished uncertainty from extended US-China trade truces and stable external conditions.
Index Performance and Key Drivers
The GBAI’s current performance index increased to 54.7 from 53.1 in the previous quarter, while the expectations index rose to 55.7 from 52.0, marking four-year and two-year highs, respectively. Nearly all sub-indices showed improvement, with new orders surging by 8 points to 57.5 and prices of finished goods/services rising by 4.1 points to 58.8. Expectations sub-indices remained well above neutral, led by production/sales, financing scale, fixed asset investment, and profit.
Irina Fan, Director of Research at HKTDC, noted that confidence improved across most GBA cities, with Hong Kong experiencing the strongest gains due to trade frontloading and robust financial activities. Hunter Chan, Economist for Greater China at Standard Chartered, linked the optimism to extended trade dialogues but warned that persistent trade uncertainties and competition in mainland China could temper future sentiment, prompting firms to explore overseas markets as a risk mitigation strategy.
Impact of Competition and Corporate Strategies
The survey also addressed concerns over anti-involution, or excessive domestic competition, revealing that 63.5% of respondents reported no impact, while 29% noted moderate effects and 5% significant disruptions. Among affected businesses, over 70% cited negative impacts on profit and sales, with fewer reporting issues in hiring and investment. Companies are adopting strategies such as brand building, cost control, and value-added services to counter these challenges.
Compiled from a survey of over 1,000 companies across sectors like manufacturing, trading, retail, wholesale, financial services, professional services, and innovation and technology, the GBAI provides insights into business climate and future prospects in the region, aiding investors and firms in strategy formulation.
