Chinese consumers worried about incomes
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2016-01-20 17:42:24
Chinese consumers are increasingly worrying about their incomes, raising questions over their willingness to raise spending at a crucial time in China’s rebalancing.
While Beijing is pushing the narrative that discretionary spending can compensate for a faltering industrial sector, consumer surveys are telling a very different story.
A survey of 20,000 bank depositors in the fourth quarter of 2015 by the People’s Bank of China showed that consumers are the least positive about their current salary since the survey series began in 2001.
More worrying still, future income expectations turned negative at the end of 2015 for the first time since the survey started.
The PBoC’s Future Income Confidence Index — where any reading below 50 represents negative sentiment — was 49.1 in the fourth quarter, down from 50.1 in the third quarter, itself a previous record low.
Wages were one of the greatest concerns cited by Chinese consumers going into 2016, according to a survey by FT Confidential Research, a research service from the Financial Times.
Twenty-eight per cent of the 2,000 consumers surveyed said pay rises were one of their biggest worries for this year. Only food safety was a greater cause of concern, cited by 37 per cent of respondents.
Wages were a particularly pressing issue for low-income respondents (those with an annual household income of less than Rmb100,000, or about $15,200), who put pay rises above other worries.
With December’s Caixin/Markit Services purchasing managers’ index falling to its lowest level in 17 months, investors should take heed of what consumers, rather than the government, are saying.
Rafael Halpin is head of research at FT Confidential Research.