WASHINGTON, D.C. -- Chinese consumer confidence, rated among the lowest in Asia at the end of 2008, is showing signs of rebounding in a number of Chinese cities. A Gallup survey conducted in June 2009 across 16 large- to small-sized cities in China found economic optimism among these consumers returning to its third-quarter 2008 level. Fifty-five percent of respondents in the second quarter of 2009 agreed or strongly agreed that the Chinese economy would be getting better in 12 months, roughly the same percentage who said so in the third quarter 2008 -- just before the onset of the global economic collapse.
Since the end of 2008, the proportion of Chinese respondents in these 16 cities saying they expected their economy to get better has increased to 55% from 44%. Annual household income among the 16 cities polled ranged from more than 30,000 RMB in the tier one cities (the largest metropolitan areas in the country) to less than 20,000 RMB in the tier three cities (small, less-populated cities).
With Chinese consumer confidence on the rise in the 16 cities surveyed, economists are beginning to revise their estimates for Chinese GDP growth for this year and next. The Economist has upped its forecast to 8% growth in 2009 and 2010, with consumerism contributing significantly to the growth.
However, economic confidence among those in the 16 cities surveyed has not yet returned to 2007 levels, when the economy was still growing at double-digit rates. In the first quarter of 2007, 71% of respondents agreed or strongly agreed that their economy would be getting better in the next 12 months.
Sparking a Boom in Auto Sales
One area in which the Chinese government is working to spur household consumption is in automobile sales. In addition to the stimulus, the Chinese government cut the sales tax on small-engine automobiles in half, from 10% to 5%. In early 2007, more than 2.1 million cars were sold to Chinese consumers. Sales increased to nearly 2.6 million autos sold by early 2008, but fell throughout the year, returning to nearly 2.7 million vehicles sold by January 2009, when the Chinese government announced the auto tax cut. Following the cut, auto sales jumped to more than 3.4 million cars sold in the first quarter of 2009.
Gallup surveyed Chinese in these cities on items they have bought in the past six months and those they would want to buy in the next six months. At the time of Gallup's survey, 11% of Chinese respondents surveyed said they had bought a car in the last six months, and another 15% said they want to buy one.
With more than 6 million vehicles sold in the first half of 2009, China is now on track to overtake the United States in 2009 as the world's largest auto market. Overall, the growth in general consumer spending during the first half of 2009 may help China offset the drop in its export market and achieve its annual GDP growth target. Even Western companies have begun to look toward Chinese consumers as a way to boost their sales. The future of economic confidence in China will tell how widely Chinese consumers will spend on domestic and international products.
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Results are based on computer-assisted telephone interviews with 1,700 adults, aged 15 and older, conducted June 11-29, 2009 in Beijing, Cengxi, Changsha, Chengdu, Guangzhou, Guilin, Fuzhou, Jinzhong, Lanzhou, Liaocheng, Nantong, Shenyang, Shenzhen, Shanghai, Yueyang, and Zunyi, China. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.