Greater Bay Area Business Confidence Reaches Multi-Year High Amid Trade Truce Extension
Business confidence in China's Greater Bay Area surged to multi-year highs in Q3 2025 as extended US-China trade truce reduced uncertainty, though companies continue diversifying overseas markets to mitigate persistent trade risks.
The Standard Chartered Greater Bay Area Business Confidence Index (GBAI) reached multi-year high levels in the third quarter of 2025, reflecting a broad-based recovery in business sentiment following reduced external uncertainty from the extended US-China trade truce. The quarterly survey, jointly conducted by Standard Chartered and the Hong Kong Trade Development Council, showed both current performance and expectations indices climbing significantly, with the current performance index rising to 54.7 from 53.1 in Q2 and the expectations index increasing to 55.7 from 52, marking four-year and two-year highs respectively.
The improved sentiment coincided with the survey period from early August to early September when the US extended its trade truce with China by another 90 days to November and reached multiple trade agreements with major trading partners. Amid constructive dialogue between China and the US, tariff uncertainty diminished and the overall external environment became relatively stable, supporting a quarter-on-quarter recovery in business confidence across the region.
Almost all sub-indices showed improvement, with six of eight current performance components seeing quarter-on-quarter gains. New orders demonstrated the strongest rebound, jumping 8 points to 57.5 from 49.5 in Q2, while prices of finished goods/services increased 4.1 points to 58.8. Business outlook showed even more pronounced optimism, with all expectations sub-indices remaining well above the neutral mark. Production/sales saw the strongest rebound among the eight main sub-indices at +5.3 points, followed by financing scale (+4.8 points), fixed asset investment (+4.2 points) and profit (+3.9 points).
Irina Fan, Director of Research at HKTDC, noted that Hong Kong saw the strongest confidence rise among all GBA cities, with current performance and expectations sub-indices increasing 8.3 points and 7.3 points respectively to 52.2 and 53.6. This improvement was underpinned by continued trade frontloading and robust financial activities across the region. Additional research materials are available through HKTDC Research.
Despite the improved sentiment, Hunter Chan, Economist for Greater China at Standard Chartered, cautioned that persistent trade uncertainty may hold back business confidence again. With increasing external uncertainties and competition challenges in the Chinese Mainland, the trend of diversification continues, with exploring overseas markets remaining a key strategy for GBA corporations to mitigate potential risks. The survey found that 24.5% of companies are adopting overseas market exploration as a risk mitigation strategy.
The survey also examined the impact of excessive competition, or anti-involution, on GBA businesses. Most respondents (63.5%) indicated they had not been affected by excessive domestic competition, while 3.1% reported benefiting from it. Approximately 29% experienced moderate impact and 5% reported significant impact. Among affected businesses, over 70% saw negative effects on profit and sales, while only around 40% indicated disruptions to hiring and investment. Companies are addressing these challenges through multiple strategies including brand building and marketing (36.3%), cost control and inventory management (35.6%), and providing value-added services (29.7%).
The GBAI represents the first forward-looking quarterly survey examining business sentiment and synergistic effects across GBA cities and industries. Compiled from surveys of more than 1,000 companies across manufacturing and trading, retail and wholesale, financial services, professional services, and innovation and technology sectors, the index provides valuable insights for investors and businesses formulating market strategies for the region. The complete report and supporting materials can be accessed at http://bit.ly/4oiGQDU.