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Chinese consumer confidence slips

Source:   Time:

Chinese consumer confidence slipped 3 points to 105 in the second quarter. It's the first decline this year and comes amid concern over growing inflation, according to a report by The Nielsen Co released on Tuesday.

Despite the decline, however, China continues to enjoy solid consumer confidence compared with other countries.

Consumer confidence levels above and below a baseline of 100 indicate varying degrees of optimism and pessimism.

Global consumer confidence declined to its lowest level in six quarters as the economic recovery hit a stumbling block and amid fears for recession jitters around the world.

According to Nielsen's latest report, global online consumer confidence fell 3 index points from 92 to 89, the lowest reading since the fourth quarter of 2009. Confidence in the United States fell 5 index points to 78, 2 points lower than the 80 points recorded in the first half of 2009 at the height of the global recession.

"As the ongoing sovereign debt crises in the US and the European Union (EU) increase global economic uncertainties, we expect global consumer confidence to slide further in the third quarter," said Karthik Rao, managing director of Nielsen Greater China.

"Although China's consumer confidence is also likely to be affected by the global economic turbulence in the coming quarter, there will not be big swings because the country's economic fundamentals remain strong and people's incomes are seeing a gradual improvement," he added.

Ma Jun, chief China economist of Deutsche Bank AG, said in a research note on Tuesday that the bank has cut its baseline projection for Chinese GDP growth to 8.9 percent for 2011 (from 9.1 percent), and to 8.3 percent for 2012 (from 8.6 percent), largely reflecting the downturn in export growth because of the debt crises in the EU and US.

Rao said that the 3-point drop in the first quarter was driven mainly by declining consumer expectations regarding incomes during the latest quarter.

"This decline comes after the first quarter when the Chinese were overly optimistic," said Rao.

Looking across China, confidence in first-tier cities was stable, with Guangzhou expressing the highest level of consumer confidence (106). The level in Beijing was 100 (a rise of one point) while in Shanghai, it remained unchanged at 99 points. Consumers in rural areas continued to enjoy the highest confidence level (109) despite a 4-point drop in the latest quarter.

"People in rural regions are more affected by inflation as food accounts for a bigger proportion of their daily consumption," said Rao.

China's consumer price index, the key gauge of inflation, reached a 37-month high of 6.5 percent in July.

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