CPA Australia survey finds businesses in China cautiously optimistic in 2019 amid global uncertainties

HONG KONG, CHINA -�Media
OutReach - 25 January 2019 - Businesses
in China are cautiously optimistic for 2019 despite facing a number of global
and domestic uncertainties and challenges, with tax reform and innovation and
technology policies expected to provide a boost to the economy and businesses, according to the latest China Economic Survey conducted by CPA
Australia, one of
the world’s largest professional accounting bodies.

From left to right: Mr William Huang, President of CPA Australia South China Committee, Mr Derek Chan President of CPA Australia North China Committee, Mr Kevin Ng, Member of CPA Australia North China Committee, Mr Michael Yu, Deputy President of CPA Australia East & Central China Committee

 

Over 60 per cent of respondents forecast that China
will maintain stable economic growth above 6 per cent in 2019, despite rising
global economic uncertainties created by trade tensions, Brexit, and rising US
interest rates. This confidence is reflected in profit forecasts for 2019, with
56.8 per cent of respondents expecting their employer’s profit to increase by more
than two per cent. Further, 71.3 per cent believe that their company will maintain
or increase its headcount in 2019.

 

Top factors influencing this positive sentiment are
tax reform, policies guiding the transformation of China to an innovative and
intelligence-led economy and the Belt and Road Initiative, according to the finance
and accounting professionals responding to this survey.   

 

Tax reforms seen as
an important driver of economic growth in 2019

As part of an ongoing agenda to improve living
standards, the Government introduced a series of tax reforms in 2018, while
some policies, such as individual income tax reform, came into effect on 1 Jan
2019. The survey findings reveal that the market has reacted positively to these
reforms, with over half of the respondents stating that tax reform will be one
of the key drivers boosting economic growth this year.

 

Respondents believe the main benefits from tax reform include decreasing business
operating costs, further encouraging China’s economic transformation, increasing
domestic consumption and making the tax system more robust. Individual income
tax reform is also expected to help businesses, with almost one third of
respondents expecting that this reform alone will increase their sales volume
in 2019.

 

Innovation and
technology keep boosting growth

The survey found that the Government policies
guiding China’s economic transformation and supporting innovation and
technology are expected to not only continue to boost the economy but also support
business growth.

 

Over
half of respondents reported that their business’s investment in technology in
the past 12 months has already improved their profitability.

 

Businesses
in China are also investing heavily in innovation, with 75.5 per
cent of respondents expecting their company will or may
introduce a totally new product, service or process in 2019, which is an
increase of 10 per cent compared with the survey result in 2017. We see a
direct link between the Government’s policies and the very strong focus on innovation
and technology by businesses in China.

 

Going
global strategy and opportunities from Belt and Road Initiative

Though businesses are facing rising global economic
uncertainties, the professionals who responded to this survey value the business
opportunities created from China’s opening-up and going abroad strategy. On the
Belt and Road Initiative, most respondents believe it will create new
investment opportunities for Chinese businesses outside of China and create
more trade opportunities.

 

When
asked the business’s plan in response to the Belt & Road Initiative over
the next three years, over half of the respondents reported an expectation that
their business will take some form of action to take advantage of the initiative,
including exploring new business opportunities and increasing business
activities in the countries along the Belt and Road.

 

Along
with a global strategy and the internationalisation of the RMB,
almost one quarter of
respondents say that they expect their business will likely establish or expand
their presence in other countries in 2019.  

 

Business strategy
in 2019

Given rising global uncertainties, it is no
surprise that most businesses have chosen cost management as their key
strategic focus in 2019. However, under the transformation to an
intelligence-led environment in China, a very high number of respondents stated
that their employer’s strategic focus for 2019 is to attract, retain and
develop talent. This reflects their optimism in the medium to long-term and their
belief that talents are critical assets to enable the business’s
sustainability. When asked which skills were most valued by employers,
respondents identified teamwork capability, technical skills and communication
skills.

 

According
to the survey findings, many businesses in China will this year be attempting
to strike the right balance between short-term measures, such as cost
management to address current challenges, and medium to long-term investments
in staff, technology and innovation, which is essential to their future growth
and success.

 

About the survey

The
survey was conducted from 14 December 2018 to 10 January 2019 with 220 of CPA
Australia’s Greater China members participating, including finance and
accounting professionals from listed companies, multinational corporations,
private enterprise and government.

 

About CPA Australia

CPA Australia is one of the world’s largest accounting bodies with more
than 163,000 members
working in 125 countries and regions around the world, and with more than
25,000 members working in senior leadership positions. It has established a
strong membership base of more than 18,000 in the Greater China region.