China SME Confidence Index down

China's small businesses are cautious about prospects in the world's second-biggest economy amid a manufacturing contraction in recent months, a bank survey has shown.

The China SME Confidence Index from Standard Chartered Bank reached 52.04 for the second quarter this year, down 4.47 from the previous quarter.

The decline came after a surge in the first quarter and highlights concerns about economic conditions despite a slew of measures taken by Beijing over the following months.

All five sub-indexes of the survey fell in varying degrees in the three months. The sub-index measuring SMEs' confidence with the wider economy fell 7.51 points to 47.36. On operation, it was down 1.89 points at 54.92 and stood at 56.97 on investment and 48.90 on financing.

The SME Confidence Index is based on a quarterly survey covering 1,000 samples from 20 cities, including chemicals and materials, transport and equipment manufacturing.

The results were similar to an earlier business climate survey conducted by China-based Internet company NetEase Inc, which indicated that financing difficulties were not a major issue this year as more SMEs reported sufficient cash flow.

Forty-two percent of the surveyed firms forecast a continuation of the financial crisis, a drop of 8 percent compared with last year. But another 40 percent were "unsure" about their business prospects, compared with just 27 percent a year ago.

A third of the SMEs showed faltering confidence in the macroeconomic outlook for 2013, which was 4 points higher than last year. Half of the companies are as optimistic as they were last year. Only 40 percent said they expect improved business performances in 2012, while the figure was 51 percent last year.