People’s willingness to spend in the third quarter reached its highest level in three years, driven mainly by consumers in China’s smaller cities, Nielsen reported Tuesday.

The consumer confidence index in China stabilized at 110 in the third quarter, a rise of four points over the same period last year, according to findings from Nielsen, a leading global provider of information and insights into what people watch and buy.

Also in the third quarter, the country’s GDP growth rate rebounded to 7.8 percent from 7.5 percent in the previous quarter, reflecting rosier perceptions of personal finance and jobs.

Moreover, consumers’ spending intentions rose another two percentage points to 43 percent, the highest since the second quarter of 2010, Nielsen said.

“The increase in Chinese consumers’ willingness to spend was mostly seen in lower-tier cities and rural areas, which was in line with government efforts to lift household incomes, provide affordable housing and healthcare, and grant access to compulsory education in these city tiers,” said Patrick Dodd, managing director of Nielsen China.

They also create a good foundation with which China can transform its economic growth pattern from investment-driven to consumption-driven, he added.

“With urbanization being one of the strategic objectives of China’s economic rebalancing, we are confident the momentum will continue,” Dodd said.

Fourth-tier cities showed a growing momentum in the third quarter, with a two-point rise to 109, which was up seven points from the first quarter, the report said.

Respondents from fourth-tier cities reported increased optimism for personal finance from 66 to 68 percent. Purchase intention was up three percentage points, to 48, following a big jump of seven percentage points between the first and second quarters.

“The Tier 4 cities, many of which are located at the border of rural and urban China, are generally regarded as the regional center where rural consumers can shop or try out city life, making them as a bridge to connect urban consumption with rural consumption,” Dodd said.

“Expansion by multinational and local companies and retailers into lower-tier cities will further unlock consumers’ purchasing power in these emerging markets,” he added.

According to Nielsen’s findings, retail sales for fast-moving consumer goods (FMCG) in fourth-tier cities accounted for 44 percent of the nation’s total in the third quarter, up 9 percent compared with the same period last year. Meanwhile, consumers from these cities generated 52 percent of China’s total online shopping.

Apparel, accessories, cases and bags enjoyed the highest penetration, of around 88 percent of Chinese online shoppers, followed by products of daily use or household products, which attracted more than 73 percent of online shoppers, the Nielsen research showed.

Income (43 percent) and health (26 percent) remained the top concerns for Chinese consumers, according to the survey.

Increasing food prices, formerly ranked among the top three concerns, fell to fifth, following children’s education and welfare, and personal career, and equally weighted with job security.

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns, and spending intentions among more than 29,000 respondents with Internet access in 60 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

The Nielsen China Consumer Confidence Report, the largest of its kind, is compiled from a mixed-methodology survey of 3,500 respondents from across China – everywhere from key cities to rural countryside.

In other key developed economies, the Nielsen survey showed that the United States saw consumer confidence levels rise seven index points to 98 from the same period 12 months ago, its highest score in six years and nearing pre-recession levels.

Meanwhile, consumers in India and Brazil remain some of the most confident in the world.

Source: China Daily

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