Consumer spending stays bullish

Consumer confidence rose by one percentage point during the second quarter of 2015, fueled by surging demand in rural areas, an industry measure said.

The Nielsen consumer confidence index, released on Thursday by private sector information and measurement company Nielsen NV, climbed to 107, up from 106 in the first quarter, but remained at the same level compared with the last quarter of 2014.

"With a change of only one percentage point, we're seeing a 'new normal' for Chinese consumer sentiment, but a steady one," said Oliver Rust, managing director of Nielsen China.

The growth, he said, was driven by a willingness to spend by 47 percent of the respondents, a 10-percentage-point rise from the first quarter, particularly in rural parts of the country.

Asked why they believed it was the time to buy what they needed, a quarter of the rural consumers said the shopping facilities had become more convenient, placing that above all other factors in making them go out and shop.

"The advent of better logistics and e-commerce are driving higher consumption and willingness to spend in rural markets. This is a key development for technology providers, manufacturers and retailers," said Rust.

The Nielsen index is calculated using a number of factors, including job prospects, personal finances and immediate spending intentions. Confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.

The survey paints a more optimistic view than other recent consumer studies. The ANZ-Roy Morgan China Consumer Confidence Index, for instance, dropped to its lowest level on record.

Polling overall economic predictions, 59.1 percent of its respondents said they expected China to enjoy "good times" next year (a 0.8-percentage-point fall), while "bad times" were expected by 13.2 percent (a 1.3-percentage-point rise). The ANZ index called the July reading "record low consumer confidence", which was largely within its expectations, "given the equity rout that started in June".

"China's A-share market tumbled almost 30 percent from its peak in mid-June during the period and the negative wealth effect was reflected in July's consumer confidence reading," said Liu Ligang, chief economist for China at Australia and New Zealand Banking Group Ltd.

Nielsen's Rust said, however, he expected the stock slump's impact on Chinese consumers not to be as negative, since quite a number of consumers in rural areas are not investors in the market. He said the government's Belt and Road Initiative would also benefit rural spending.

Ma Xiaowen contributed to this story.