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China wants to save not spend - survey

URBAN residents in China are more inclined to save than spend as the urge to consume dropped to a record low, a central bank quarterly survey said today.

Only 15.1 percent of respondents said they now preferred to spend, a 14.6 percent drop on a quarter ago, the People's Bank of China said today.

The central bank made the survey in the second quarter of 2009 in 50 cities in China. The quarterly survey has been conducted on 20,000 city dwellers' intentions on investment, savings and consumption since 1999.

Forty-seven percent of the respondents said they chose to save more, up 9.5 percentage points on a quarter earlier, and this pushed the savings trend to a record high.

"The up-and-down figures show that urban residents are more cautious on consumption with the uncertainties of future incomes or the impact of shrinking incomes," the central bank said.

The indicator on how residents' felt about their income was 8.6 percent below zero, a record low. It was a sharp decrease from 28.6 percent in the first quarter.

It means 8.6 percent more respondents experienced a drop in the family income in the past three months over those who earned more.

Confidence in future incomes is also deteriorating. The index of future income confidence dropped to 3.4 percent from 17.7 a quarter ago. It means only 3.4 percent more respondents said they expected their incomes to rise in the future.

Respondents are showing more concern about employment and income prospects with 45.4 percent of respondents said they were finding it hard to secure a job, up 2.6 percentage points on a year ago.

More than 60 percent of respondents said they found the current property prices were beyond their reach and the number of those willing to buy real estate is down 0.9 percentage points on a quarter ago to 15.8 percent.

Urban residents were also showing an increasing willingness to invest, with the indicator for "more investment" rising for two quarters to 37.9 percent, up 8.8 percentage points in the past two quarters.


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