Chinese companies prepare for improving consumer sentiment

Months before China closes the lid on the Year of the Dragon, Guangzhou Aoking Leather is ramping up luggage production, adding to signs that the slowdown in the world's second-largest economy is poised to ease.

"People's sentiment and confidence in the economy and in their income prospects are improving," said Song Chunhong, a deputy marketing manager at the company in Guangdong.

Sheng Laiyun, of the National Bureau of Statistics, sees broader signs of recovery in the more-developed seaboard provinces, which are usually first to register shifts in the economy's prospects. "The duck knows first when the river becomes warm in spring," he said, quoting an 11th-century Chinese poem.

While China's years of 10 per cent growth may be behind it, a stabilisation about 8 per cent would help counter what the International Monetary Fund last month called an "alarmingly high" risk of a steeper drop in global expansion.

Overseas firms from computer maker Dell to Hong Kong jewellery makers see sales in mainland China improving in coming months, and domestic manufacturers are more confident, a release showed yesterday.

"We have seen an increasing amount of evidence for green shoots" on the mainland, said Lu Ting, the head of greater China economics at Bank of America, who raised his fourth-quarter forecast for growth to 7.8 per cent from 7.5 per cent.