CONFIDENCE of China businesses fell to a seven year low in the second quarter of this year against improved sentiment in major developed countries, an industry survey found today.

An index measuring business optimism on China's mainland dropped to 4 percent in the second quarter from 25 percent in the first quarter, according to Grant Thornton, a global auditing firm.

The index is the difference between the percentage of respondents expressing optimism and that of the people expressing pessimism. It's the lowest since the firm started compiling China data in 2006.

Forty percent mainland respondents said uncertain economic outlook poses the biggest threat to their development, and fewer companies said they will increase investment in manufacturing and research in the next 12 months.

"China's export remains weak while domestic economy is facing challenges of overcapacity and industrial transformation," said Xu Hua, leading partner of Grant Thorton China. "We hope the government could do more to reduce financing costs, especially for small businesses to help them survive on the market."

The survey was released after China reported exports in June recorded the first year-on-year decline since January 2012.

Globally, business optimism stays at 27 percent, the same as that of last quarter. The US index surged to 55 percent from 31 percent, the highest since 2005. UK recovered from a negative to 35 percent while Japan recorded the first positive figure since data were compiled in 2003.

The survey covers 12,500 businesses each year across 44 economies, of which hundreds come from China's mainland, the firm said.