While financial markets continue to fret about the outlook for the Chinese economy, it’s clear that that sentiment does not extend to those living in the country.
For a fourth consecutive month, the Westpac-MNI China consumer sentiment survey has risen, climbing to the highest level seen since May 2014.
Overall the sentiment gauge jumped by 1.5% to 118.2 in September on the back of increases in four of the survey’s five sub components.
Reflective of the growing belief that wild gyrations in Chinese stocks doesn’t impact the average Chinese person, the survey outcome suggests consumers are not paying anywhere near as much attention as those outside of China.
“The September survey provided the first insight into how respondents view the latest stock market declines, with the previous survey period ending before the August equity fallout began,” the report said.
“Much like the reaction to the July stock shakeout, the majority of consumers barely batted an eyelid. This is maybe not so surprising given that only around 11% of our urban dwelling respondents identify themselves as actually being invested in the market. The market is unlikely to be viewed as a bellwether for economic prospects either – the spectacular market surge in the year prior to the rout coincided with continued weak growth for China by historical standards.”
Recent developments that have spooked more established financial markets — the August rate cut and change to the renminbi fixing methodology from the PBOC — actually worked in tandem to boost confidence levels, with the survey’s measures on business conditions looking ahead one and five years improving during the month.
As was the case with business conditions, perceptions towards current family finances also improved.
“Family balance sheets continued to benefit from the easier policy environment with the cumulative rate cuts since November beginning to flow through,” the report said.
“This effect showed through in a further fall in the percentage reporting spending more than 50% of their monthly income on daily expenses and an improvement in leisure spending measures.”
Fitting with the recent improvement in China’s property market, particularly in large tier-one cities, sentiment towards housing also brightened.
“House Buying Sentiment rose, along with the proportion of respondents nominating real estate as the wisest place for savings,” the report said.
Commenting on the data, MNI Indicators chief economist, Philip Uglow reflected on the obvious: while those outside of China are fretting about the nation’s economy, those within it are not.
“Our cross-section of urban Chinese consumers seems oblivious to the tirade of negativity that surrounds China at the moment,” he said.
“Instead, consumer sentiment is at the highest in almost one and a half years, which is a boon for an already firm retail sector. While China’s traditional industrial growth engine is slowing, the growing consumer and service sector should help to underpin growth in the months and years ahead.”
Although this is only a survey, and Chinese economic growth is clearly not as robust as it once was, perhaps there’s a message in the report for those predicting doom and gloom for the nation in the years ahead. If the economy is not bad enough to warrant a reaction from those experiencing it first hand, should those outside the nation who are forced to speculate really be all that worried?
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