Could China's SME's Be Pointing To A Recovery? - Emerging Market Views

Could China’s SME’s Be Pointing To A Recovery?

June was a good month for China’s small and medium-sized enterprises (SMEs), according to Standard Chartered’s proprietary survey of over 500 SMEs across the Mainland market.

We surveyed the performance of SMEs over a range of key indicators monthly, providing a regular temperature-check on these crucial drivers of economic growth. This month, our Headline Small and Medium Enterprise Index (SMEI) has risen to 53.3 from 51.7 in May, indicating that SMEs are slowly bouncing back.

As China gradually resumes business activity, the improved performance of SMEs in many sectors could bode well for businesses in other regions of the world looking to recover from the impact of COVID-19.

With the easing of lockdown measures, domestic demand in China has picked up, driving rapid growth in SME sales. Production activity also increased in June, with an accelerated use of capacity and a mild increase in hiring.

As SMEs contribute about 80 percent of hiring in China’s urban areas, policymakers have prioritized the protection of their employment levels this year. With the improved activity in June, our ‘employment expectations’ indicator rose more significantly than in previous months to 53.2 from 52.1 last month.