China's poorer regions fare better in downturn: survey BEIJING (Reuters) - Businesses in China's poorer provinces are weathering the effects of economic downturn better than those in the country's wealthier regions, the preliminary findings of a nationwide survey of senior executives revealed on Monday. The China Beige Book survey of more than 2,000 executives detected a broad downturn in business optimism, particularly among manufacturers, though there was relative strength in the retail and services sectors and a more pronounced growth picture in less prosperous, but rapidly developing inland provinces. "This faster growth is evident in Q3 in manufacturing, retail, services, and property to varying degrees," said the survey, conducted between August 9 and September 3 by New York-based CBB International, based on the U.S. Federal Reserve's economic report of the same name. There was also evidence of a more optimistic outlook among executives in China's domestically-focused industries. While CBB Q3 results confirm manufacturing weakness, our survey extends to retail, services, property, and other sectors. Most other sectors show more resilience and greater confidence than manufacturing," said the survey, which breaks the country down into eight regions. Transport was the most optimistic sector of the economy in Q3, the survey found, and the one area of business activity to have recorded stronger sales growth versus Q2, with 65 percent of firms questioned posting gains - up 8 percentage points. Travel agents are particularly optimistic, with 71 percent expecting stronger revenues in six months' time. Some 60 percent of shippers also anticipate revenue growth. The services sector in general is upbeat, with 67 percent of firms questioned forecasting higher sales in six months, compared with 11 percent of firms anticipating declines. It's a different story in China's export-oriented factories. Manufacturers are considerably less optimistic than last quarter. Those expecting higher sales in six months fell 18 points to 53 percent, predictions of falls doubled to 20 percent," the survey found. China's economy is on course for its weakest annual expansion since 1999 with analysts expecting that China's six-quarter long economic slowdown may extend into the July-September quarter, with full-year growth for 2012 likely to fall to 7.7 percent according to a Reuters poll. The quarterly China Beige Book survey of face-to-face and telephone interviews gathers views on the current state of companies, industries, regions and the economy at large, comparing conditions to the previous quarter and asking respondents to anticipate conditions three and six months ahead. The survey sample includes executives from manufacturing, retail, service, transportation, real estate and construction, farming, and mining. Respondents ran businesses of every size from the micro-level - employing up to 19 staff - to large firms with more than 500 employees. It also canvassed opinions from 160 bank loan officers and branch managers. The survey found that China's monetary policy easing measures had delivered a nascent recovery in the property sector - vital to the health of the economy as real estate directly affects 40 other industries - but that executives were broadly reluctant to borrow to invest and grow their businesses. That implies the effects of policy easing so far - including two interest rate cuts in June and July and the freeing of about 1.2 trillion yuan ($190 billion) for lending by 150 basis points of cuts to reserve requirement ratios at the country's banks since November last year - may have reached their limit. Consumers were still spending, albeit at a slower pace of growth than three months ago. Sales revenue was up at 58 percent of outlets questioned, 10 percentage points fewer than those recording expansion in Q2. Over two-thirds of retailers questioned expected higher sales in six months, compared to 11 percent who predicted declines. Growth in business spending eased in Q3 from Q2, but 55 percent of firms polled were making capital investments. Hiring growth is slowing and wage rises have cooled, though wage pressures have not, given slimmer revenue growth. Some 28 percent of firms reported falling margins, up 11 percentage points on Q2. Only 44 percent of firms reported rising profits. A detailed report of the survey's full findings will be published in early October. Reporting by Nick Edwards; Editing by Eric Meijer