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November 13, 2009

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Home » Business » Economy

Chinese consumer optimism rises in Q3 over economic view

CHINA'S urban consumer confidence improved in the third quarter as consumers are more optimistic over the economic outlook after government efforts to avert the economic slowdown are paying off, a survey said yesterday.

Meanwhile, consumers expect inflation to rise due to the sustained loose monetary policy, according to the survey by Shanghai Jiao Tong University that covered more than 40 major Chinese cities.

China's urban consumer confidence index rose to 97 in the third quarter, 2.3 percentage points higher than 94.7 in the second quarter. An index reading above 100 is positive while it's negative when it drops below 100.

"The government's massive spending plans brought about a steady economic growth, which lifted consumer confidence," said Wang Fanghua, dean of Antai College of Economics and Management at the university.

China's gross domestic product rose 8.9 percent in the third quarter from a year ago. This brought the GDP to jump 7.7 percent year on year in the first three quarters.

Meanwhile, there are growing expectations that inflation will rise despite the consumer product index, the main gauge of consumer inflation, dipping 0.5 percent in October, the ninth straight month the index has dropped.

The consumer price expectation index gained 7.82 percentage points to 88.62 in the third quarter from the second quarter, indicating more people expect the CPI to climb.

About 47 percent of consumers thought the CPI will rise less than 5 percent while nearly 20 percent said it may rise over 10 percent, according to the survey.

This came after the government repeatedly expressed its stance to stick to the loose monetary policy. Market observers also did not expect an immediate shift from the relaxed fiscal and monetary policy.

"The consolidation of the economic recovery still relies on a relatively loose monetary policy and China is not likely to risk reversing the recovery by exiting the current policy," said Wang.


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