(Bloomberg) -- Top foreign executives in China grew marginally more confident in the mainland during the first half of the year, even as concerns over the economy and rising geopolitical tensions forced many to reassess their presence. 

There was a small uptick in sentiment about current and future business conditions among the country heads of mostly US and European firms compared with the previous six months, according to a survey Friday from think tank The Conference Board. 

The improvement was largely driven by a considerable decrease in the proportion of CEOs holding negative views — rather than a surge in positivity — the think tank found. 

The confidence measure in the first half of this year was 56, up from 54 in the previous six-month period. The poll’s range is from 0 to 100, with a reading below 50 points reflecting more negative than positive responses. Only 13% of CEOs expect conditions to worsen, better than 23% in the second half of 2023, according to the report. 

The outlook for hiring, meanwhile, remained bleak — with almost one-third forecasting a need to reduce headcount over the next six months, compared with 37% in the previous period. Only 6% expected the number of employees to increase, a significant drop from 20% six months ago, the report said. That comes as 58% of CEOs predict investments and operations will shift away from China to India in the next two years.

“Multinationals are understandably taking a cautious approach toward their operations and investments,” said Alfredo Montufar-Helu, head of the China Center at The Conference Board. “This is not to say that the China opportunity is over. But it certainly has become more difficult to capture.” 

The survey was carried out between April 9 and 26, receiving responses from 31 CEOs and executives. 

Other highlights: 

  • Multinational corporations are facing an expanding risk landscape. The economic slowdown was cited as the top risk impacting business, followed by geopolitical tensions: 35% expect China-EU relations to worsen, and 55% for US-China ties.
  • Demand is improving but has yet to reach pre-Covid levels for the majority of MNCs.
  • Views on sales in China have improved, with some 55% of CEOs expecting an increase over the next six months.
  • Fewer CEOs anticipate an increase in capital investment in China compared to 2H 2023 (19% versus 24%).

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