Mainland consumers more pessimistic this month
Consumer sentiment on the mainland became more pessimistic in August as confidence about personal finances and the employment outlook weakened, a survey found.
As the Chinese government has kept a tight grip on credit, economic activities have shown increasing signs of a slowdown due to sluggish demand. President Xi Jinping has emphasised that reforms and the anti-corruption fight will be deepened, which might curb the economic growth rate in the short run unless Beijing intensifies its stimulus policy, some economists believe.
The Westpac MNI China Consumer Sentiment Indicator fell to 113.3 from 114.8 in July and significantly below the 121.7 reading at the beginning of the year.
Current personal finances declined to 104.5 from 108.5 in the previous month, the lowest since July 2013. The employment outlook indicator fell below 100, the lowest since March.
While sentiment held above the 100 threshold, an indication optimists outnumbered pessimists, the reading was close to a historic low, Westpac and MNI said in a joint statement.
"From a balance sheet perspective, the risk appetite of consumers vis-à-vis their preferred investment classes increased marginally over July, but in absolute terms they continue to deploy their savings very conservatively," Westpac senior international economist Huw McKay said in the statement. He added that it would be unwise for the authorities to declare victory too early on the growth front.
The weakened sentiment was in line with the trend of economic data from industrial output to fixed-asset investment published for July. Economists say the rebound in economic growth to 7.5 per cent in the second quarter from 7.4 per cent in the first might be fragile unless fresh stimulus is adopted.
The mainland's factory sector expanded at its slowest pace in three months as new orders and production moderated, as indicated by the fall in the HSBC flash China manufacturing purchasing managers' index to 50.3 in August from 51.7 in July.
The sentiment survey showed that confidence towards the property sector faltered. However, McKay said that in absolute terms consumers were still reporting house price expectations that were above the long-run average, "which is an expression of collective faith that easier policy will eventually carry the day, even if the short-term situation looks increasingly shaky".
National Bureau of Statistics data showed that a record number of cities - 64 out of 70 - reported a drop in new home prices last month. The State Council has vowed to push down financing costs to spur demand.
Economists say accelerated infrastructure spending should translate into faster fixed-asset investment growth over the next few months.
But some economists, including Peking University professor Huang Yiping, urged the government to focus on reforms rather than stimulus to upgrade the industrial structure and boost efficiency.
Under a reform plan approved by Xi, officials in charge of state-owned enterprises could face pay cuts of up to 50 per cent, sources told the South China Morning Post last week.