China’s consumers are still feeling confident and upbeat despite the nation’s economic downturn.
“Chinese consumers seem to be holding up despite the volatility we’re seeing in markets,” Louise Keely, president of the Demand Institute and the lead author of Nielsen’s quarterly global survey on consumer confidence, told The Wall Street Journal.
“Retail sales continue to be quite strong…and consistent with that, consumer confidence in China remains stable and high,” she said.
China’s consumer confidence ticked up in the final quarter of 2015, according to a survey by market research firm Nielsen
, beating the global average and outperforming most regional peers.
For the fourth quarter, consumer confidence in the mainland rose to 107 points, nudging up 1 percentage point on the quarter, the report released on Wednesday (Feb 3) said. The index score was higher than the global average of 97, and met the average score of 107 among Asia-Pacific countries over the October-December period.
Chinese consumers were also among the most confident among the world’s biggest economies, beating the United Kingdom (101), United States (100) and Germany (98), which all showed quarter-on-quarter declines.
Meanwhile, consumers were also willing to open their wallets and spend more, despite growth in the world’s second-biggest economy slowing to a 25-year-trough of 6.9 per cent last year and renewed turbulence in the country’s financial markets.
According to Nielsen’s fourth-quarter survey
, Chinese consumers are far more worried about their health and work-life balance than they are about job security.
"This is a result of China's commitment to shift from an investment-driven to consumption-driven economy," Kiki Fan, managing director of Nielsen China, explained to ChinaDaily.com.
"Booming online shopping provides more variety and convenience to customers, thus fueling their spending desire," Fan said.
"Meanwhile, consumers' bulging wallets also supported their strong willingness to spend," Fan added.
However, Keely cautions against reading too much into the consumer-confidence data, as consumption isn’t the same driver of growth in the Asian behemoth as it is in the U.S.
Still, she said, “It’s interesting that we are seeing consumption still look to be a relative bright spot in China despite everything else.”
China's stocks have had a dismal start to 2016, with the Shanghai Composite benchmark tumbling 22 percent so far this year.
Investors say Asian markets have yet to bottom out, given worries about the health of the global economy and the plight of energy companies as oil prices continue to suffer. Investors are also concerned that sagging crude prices are creating bad debt in banking system.
Arthur R. Kroeber, Nonresident Senior Fellow, Foreign Policy for Brookings-Tsinghua Center, warns that we must remain wary about China until government officials prove they aren't swaying the market or economic data.
“Investors both inside and outside China are not convinced. The heavy-handed management of the equity and currency markets gives the impression that Beijing is not willing to tolerate market outcomes that conflict with the government’s idea of what prices should be," he wrote for Brookings.
"So long as Beijing continues to intervene in markets to guide prices, and fails to deliver on the key structural reforms needed to create a sustainable consumer-led economy, markets both inside and outside China will continue to be nervous about the sustainability of growth, and we will see more “China scares” like the one we endured in January. A clearer sense of direction is required, as is better communication."
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