Chinese Consumer Confidence Nears Record Low... "Bolder Stimulus Measures Needed"

Consumer confidence in China has approached an all-time low, prompting calls for bolder and more effective stimulus measures to address the issue.

On the 4th, according to the Hong Kong South China Morning Post (SCMP), global investment bank (IB) Nomura reported that China's consumer confidence index for July stood at 86, down from 86.2 in the previous month. This figure is close to the record low of 85.5 recorded in November 2022 during the COVID-19 pandemic.

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Nomura's economic team, including Chief China Economist Lu Ting, emphasized, "To restore consumer confidence, China must implement bolder and more effective stimulus measures to address the real problems in the real estate sector." They also pointed out the reasons behind the decline in consumer confidence, stating, "The short-term support measures introduced this year had limited impact due to falling asset prices such as real estate and stocks, minimal wage growth, and capital outflows caused by geopolitical tensions."

This index measures consumer confidence on a scale from 0 to 200, with 100 considered neutral. China's related index once reached a record high of 127 points in February 2021. It is based on a monthly survey conducted by the National Bureau of Statistics, targeting 6,480 people across 15 provinces.

Nomura cited a survey conducted by the Baker Institute targeting 25 major cities, estimating that existing home prices have fallen about 30% from their peak in 2021. They added, "We still see the root cause as the real estate sector," and explained, "The continued decline in housing prices is severely depressing household balance sheets." Nomura also diagnosed that consumer growth remains below pre-pandemic trends, and non-food prices are "generally stagnant."

The Chinese State Council announced guidelines earlier last month to expand spending in the service sector, consisting of 20 items. Key measures include expanding caregiving support, extending visa-free entry, and promoting low-altitude aerial tourism.

Retail sales in China grew by 2.7% year-on-year in July, showing some improvement compared to 2% in June. However, the private survey Caixin Services Purchasing Managers' Index (PMI) stood at 51.6, below the previous month's 52.1 and market expectations of 51.9, signaling weakness in the service sector economy.

This content was produced with the assistance of AI translation services.