Feeling good again
AFTER two years of doom and gloom, the feel-bad factor finally seems to be starting to fade. The latest quarterly opinion survey shows a rise in economic confidence. Its index level now stands at 76, up from 73 last October. This is still far below the peak of 95, recorded in January 1994, before the recent wave of pessimism set in. Yet it is the first rise in economic confidence for two years and hopefully a sign of better things to come. Not that the economic situation has improved. The retail sector is still suffering. Unemployment has hardly fallen and more lay-offs are likely in the run-up to Lunar New Year.
But since so much of the recent economic slowdown has been a self-fulfilling prophecy, as increasing pessimism prompted a drop in consumer spending, this revival in confidence, if sustained, should be enough to provide a modest stimulus. It also shows the volatility of public opinion. Confidence plummeted and is now starting to rebound, despite the lack of any corresponding changes in the territory's economic fundamentals. These remained healthy throughout. The same applies to political confidence, although this has yet to record a similar rebound. Its index level is 86 in the latest survey, marginally down from 87 last October, and the lowest since the Tiananmen crackdown in 1989. However, polling was completed on January 12, before recent conciliatory statements by Chinese leaders.
The latest instance of these was Vice-Premier Qian Qichen's weekend call for Preparatory Committee members to try to win over the hearts and minds of Hong Kong people. In stressing the importance of setting aside sectoral interests in pursuit of the overall interests of the territory, he was continuing a trend apparent since senior official Lu Ping's New Year message, of recognising more must be done to reassure the community.
The need for this is reinforced by the volatility of public opinion demonstrated in the latest survey. Beijing needs to do very little to dispel the prevailing political pessimism. Mainland officials have already moved a long way in this direction since the start of the year, and the results of their efforts can be expected to filter through in subsequent surveys.
But further reassurances can do no harm. Instead they can help to ensure that political and economic confidence rebound in tandem.