Consumer confidence drops for third month
Consumer confidence on the mainland dropped last month for the third consecutive month amid the world's deepening credit turmoil, fuelling pressure for more growth-driven policies.
A consumer confidence barometer fell to 92.4 from 93.4 in September and 93.7 in August, the National Bureau of Statistics said yesterday.
Some economists said the deepening global financial crisis and sharp falls in mainland stock and property prices since September were eroding people's feel-good factor.
To maintain job levels and achieve 8 to 9 per cent economic growth next year, Beijing is expected to roll out fiscal and monetary measures after cutting interest rates and bank reserve ratios last night.
'All the numbers will go down for a while,' Citibank Global Markets Asia managing director and head of Asia economic and market analysis Huang Yiping said of the macroeconomic indicators. 'It will take some time before the stimulus package is implemented and before people feel [good] about it.'
The People's Bank of China lowered the benchmark one-year lending rate 108 basis points to 5.58 per cent and the deposit rate by the same margin to 2.52 per cent.
The reserve ratio was cut by 100 points for major lenders and 200 points for smaller banks.
Economists said the moves would spur housing demand and lower companies' borrowing costs.
JP Morgan China equities managing director and chairman Jing Ulrich described the cuts as 'the most aggressive' so far, which will boost investors' confidence.
'We expect China's central bank will continue to loosen money supply in an effort to improve access to financing for the corporate sector, as well as provide funding for the recently announced stimulus package,' Mrs Ulrich wrote in a note.
The latest measures will complement a 4 trillion yuan (HK$4.54 trillion) stimulus package Beijing rolled out earlier this month, which aims to stimulate domestic consumption and employment through spending in sectors such as infrastructure, property, environment, education, health care and transport.
Despite the world's gloomy outlook, Mr Huang was confident of the mainland's economic prospects, as the high liquidity in its banking system allowed ample flexibility for fiscal policies to manoeuvre.
'Domestic sales are holding up well, so far, in volume terms,' he said.
Retail sales surged 22 per cent to 1.008 trillion yuan last month, although growth eased to 23.2 per cent in September from 23.3 per cent in August.