A recent report showed that businesses in China are becoming more optimistic about the economic outlook this year, which suggests that confidence in the country's economy is increasing.

The Grant Thornton International Business Report 2014, released this week, showed that business optimism index was up 16 percent in the first three months of the year to reach 38 percent.

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The optimism was recorded at a time that China's economy is experiencing a slow down, said Grant Thornton China CEO Xu Hua. Xu said the recent data exceeded market expectations.

Although optimism about the economy's 12-month outlook increased in the first quarter, business owners remain conservative about their own growth. The report showed that expectations for increased revenue dropped 31% from a year ago while expectations of profitability also dropped to 16 percent.

Xu said the conservative expectations are expected considering that it is still in the early stage of the new business year and plenty of orders are still to be confirmed.

He, however, urged the Chinese government to lend more support to Chinese companies and businesses that are facing financial constraints.

Chinese mainland business owners who responded to a recent survey said expansion plans are hampered by shortage of finance. The business owners said they want to expand their business but can not find the right financing for such plan.

The survey also showed that bank loans continue to be the leading financing channel for businesses in China although experts said the country's shadow banking industry is also providing the needed money for businesses.

The Chinese government announced that it will soon introduce new rules that will govern the country's shadow banking industry. Analysts said shadow banking offers lower interest rates for loans and higher interest rates for investments compared to that of traditional banking.