China’s private-sector split widens as tech rises, traditional sectors struggle: survey

Many of China’s private firms continue to face tough operating conditions, including intense market competition, persistent payment delays and weak domestic demand, though technology firms have shown stronger momentum, according to fresh survey results.The recent survey of 79 entrepreneurs from medium- and large-sized private firms found that more than 70 per cent of respondents described their current business conditions as difficult or very difficult, according to the Beijing-based Dacheng Enterprise Research Institute.Many respondents said they were struggling with narrowing profit margins, persistent survival pressures and weak market confidence, the think tank said in an article about the findings, posted to social media on Saturday.“Payment arrears remain a widespread problem,” the article said, noting that nearly 60 per cent of respondents reported that mounting accounts receivable had gradually eroded their profits. “Some companies have even been pushed into financial distress as a result.”Still, the pressure has not been evenly distributed across the private sector. About one-fifth of surveyed companies reported increases in both revenue and profits, with many of the gains concentrated in emerging sectors such as Artificial Intelligence, semiconductors and advanced materials.The divide reflects a broader “K-shaped” recovery in China’s economy, with growth becoming increasingly uneven across sectors: AI, advanced manufacturing and other emerging industries are gaining momentum, while traditional industries and smaller firms remain weighed down by weak demand and intensifying competition.The divergence was also evident in data released by the National Bureau of Statistics on Monday, which showed that profits in the electronics industry surged 96.9 per cent, year on year, driven by AI-related demand. In contrast, traditional sectors such as automobile manufacturing and ferrous metal smelting saw profits decline 19.5 per cent and 25 per cent, respectively.