Home / World Economy / World Economy News / China’s big spenders are reining in on buying cars, jewellery and watches as confidence in personal finance cools, Credit Suisse says

China’s big spenders are reining in on buying cars, jewellery and watches as confidence in personal finance cools, Credit Suisse says

Chinese consumers are less confident about their personal finances, income growth and are cautious of making big purchases than they were a year ago as the country’s economic slowdown is beginning to weigh on sentiment, a Credit Suisse study has found.

The number of respondents expecting an improvement in the state of their personal finances in the next six months has “decreased significantly by 5 percentage points to 30 per cent in 2018, after a strong recovery in 2017,” according to the Credit Suisse Emerging Consumer 2019 survey.

The number of those surveyed who said it was a good time to make a major purchase declined one percentage point to 6 per cent year on year.

“This has made Chinese consumers less willing to spend across all categories, especially on large-ticket items such as cars and property, suggesting that a swift rebound in the industry data we have observed is unlikely,” Tony Wang, one of the study’s authors, said in the report.

The survey, conducted on Credit Suisse’s behalf by the research firm Nielsen, interviewed more than 13,000 people in Brazil, China, India, Indonesia, Mexico and Turkey, focusing on consumer expectations for their personal finances, inflation, household income growth and timing of big-ticket purchases. Seventy per cent of the respondents lived in urban areas.

Credit Suisse unveiled the results of the survey on Monday at its Asian Investment Conference in Hong Kong.

India was the top country in terms of consumer sentiment, with China slipping below Brazil to third place this year.

Credit Suisse said that China had the weakest income expectations since it began conducting the survey nine years ago. Real wages in China were currently increasing at their slowest pace in seven years at 6.2 per cent, the bank said.

The pace of China’s economy slowed in 2018 as trade tensions escalated between the world’s two largest economies, with US President Donald Trump imposing tariffs on nearly half of all goods imported from China to the United States.

US and China officials are expected to meet in Washington next month for additional talks as they try to reach a trade agreement.
Earlier this month, Beijing lowered its growth target for gross domestic product to a range of 6 per cent to 6.5 per cent, down from its prior target of “about 6.5 per cent”.

China’s GDP grew at 6.6 per cent in 2018, its slowest pace in 28 years.

“The trade conflict coupled with administrative measures to boost SOE [state-owned enterprise] productivity and tackle excess leverage has somewhat dented the progression of consumerism seen in recent years,” Alexander Redman and Arun Sai, two of the study’s authors, said.

Young people in China also appear less interested in luxury purchases, as the share of 18 to 29 year olds intending to buy jewellery and watches has declined sharply in this year’s survey, according to Credit Suisse.

Despite the concerns about the pace of China’s economy, consumer sentiment remained “strong” in lower-tier cities, with higher purchase intentions across all categories including luxury products.

“This is mainly attributable to faster income growth, fewer financial burdens, lower living costs and a stronger motivation to pursue a better lifestyle,” Wang said. “We expect this sentiment to lead to an acceleration shift from unbranded to branded products as well as a secular premiumisation trend.”
Source: South China Morning Post

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