China’s overall economic confidence index stands at 58.9, an increase of 3.92% over the previous year’s 56.68, indicating that the Chinese people are generally optimistic about the economy in 2017. This is on the basis of China’s Economic Confidence Index Report (2016-2017), released recently by Zijin Media Think Tank, a non-profit organization which provides up-to-date information and analysis about China’s economic and social issues.
China’s Economic Confidence Index Report (2016-2017) is based on a telephone survey of 4660 urban and rural residents in 13 Chinese cities including Beijing, Shanghai, Shenyang, Tieling, Zhengzhou, Luoyang, Chengdu, Yibin, Nanjing, Suzhou, Xuzhou, Shenzhen and Dongguan. The survey consists of questions on the following topics: i) overall economic conditions, ii) employment condition, iii) total family income, and iv) willingness to spend. The surveyed are asked to give their opinions on both the current conditions and expectations concerning the four topics.
The report presents China’s Economic Confidence Index, which is calculated according to the internationally adopted methodology. The index value ranges from 0 to 100. A value greater than 50 indicates a positive attitude towards the economy; while a value less than 50 indicates a negative attitude. An increase in the index reflects a shift to optimism about the current and future economic development, whereas a decrease reflects a pessimistic view of the economy.
The main findings of the report are as follows:
Figure 1. Comparison of Economic Confidence Index
Between 2015 and 2016
1. Overall Speaking, the Chinese people show optimism about the current economy and especially feel confident about the economic development in 2017. The survey result shows that China’s overall economic confidence index in 2016 stands at 58.9, an up of 3.92% over the previous year’s 56.68. The index of current economic confidence comes up to 50.58, increasing significantly by 8.31% compared with the pessimistic 46.70 in 2015. The index of expected economic confidence is 67.22, slightly higher than last year’s 66.61. This indicates that the moderate but stable and sound growth of China’s economy in 2016 restores people’s confidence in the overall economic situation. Notably, in both 2015 and 2016, the expected economic confidence index is higher than the current economic confidence index. Especially in 2016, the expectation index value exceeds the baseline (50) by 17.22 points. This shows that although the Chinese people take an unfavorable view of the current economy which has been facing challenges and uncertainties, they feel confident and optimistic about the future.
Figure 2. Comparison of Overall Economic Confidence Index of Cities of Different Tiers
2. People in second-tier cities are more optimistic about both the current status and future prospects of the economy than those in first and third tier cities do. The overall economic confidence index of residents in second-tier cities such as Nanjing, Suzhou, Chengdu, Zhengzhou, and Shenyang stands at 59.26 (57.34 last year), higher than the first-tier cities’ 58.98 (57.17 last year) and the third-tier cities’ 57.94 (55.16 last year). This is associated with the fact that in the past few years, the second-tier cities have enjoyed a relatively rapid economic growth and played an increasingly important role in regional development, and that residents there lead a less stressful life. Whereas people in first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhen, pressured by high living costs in housing, transportation, education and medical care, show a lack of confidence in the overall economic climate. People in Third-tier cities including Xuzhou, Dongguan, Yibin, Luoyang and Tieling are relatively pessimistic about the economy due to employment difficulties, low income and uncertain outlook.
Figure 3. Comparison of Economic Confidence Index Between
Middle Class Group and Low Income Group
3. The middle class group generally holds a “conservative optimism” about China’s economy, reflected in their relative pessimism in the economic conditions and empolyment but far-above-average optimism in their family income and willingness to spend. In contrast, the low income group shows the exact oppsite tendency. The overall economic confidence index of the 753 surveyed middle classe is 58.89, almost identical with the whole sample’s index value. However, the middle income group’s index of confidence in economic conditions and employment stands only at 55.55 and 43.05, far below the average 62.23 and 51.28. The family income index of this group is up to 77.75, the highest among all indexes of different categories in the survey. The index of willingness to spend is 64.7, also higher than the average 62.29. Whereas, the suvey result of 857 respondents with low income is: 65.1 in economic conditions, 63.5 in empoyment, 51.78 in family income, and 55.93 in the willingness to spend.
Figure 4. Percentage of Optimists and Pessimists Based on Cluster Analysis
4. On the whole, in terms of confidence in China’s economy, 55.7% of the 4660 surveyed are optimists while pessimists account for 44.3%. The major factor in differantiating the two groups is their opinions on economic conditions and employment. In comparison to the previous year’s 52% optimists and 48% pessimists, the result further proves that people are generally happier about the economy in 2016 and feel confident about 2017.
Figure 5. Comparison of Confidence Index in Economic Conditions,
Employment, Family Income and Willingness to Spend
5. The Chinese people take a more favorable view of the employment conditions in 2016 than the previous year, but still show conservativeness and pessimism compared with how they evaluate the economic conditions, family income and willingness to spend. Despite the noticeable increase over the previous year’s 48.23, the employment confidence index of 2016, which stands at 51.28, has just entered the “optimistic zone” and presumably accounts for some people’s negative view of the economy. The confidence indexes of economic conditions, family income and willingness to spend are 62.23, 59.8 and 62.29 respectively, indicating a relatively adequate confidence in the macro-economic conditions and outlooks and an increased willingness to spend.
Figure 6. Comparison of Economic Confidence Index of People of Different Ages
6. People of different ages show significant disparities in the sentiment about the economy. The elderly group and younger generation under 30 years old hold a relatively positive view of the economy, while the middle aged group displays a lack of confidence. People of the age between 30 and 50, who are the main participants of current economic and social activities, are usually over-burdened with increased household expenditures such as the children’s education fee and provision for the elders. This may explain why this group tends to be more pessimistic about the economic situation. Whereas, the elderly group and younger generation, who has either dropped out of or not yet entered the labor market, are generally less sensitive about the economic climate. They tend to respond to the survey based more on their own state of life and personal convictions than the external conditions.
Figure 7. Consumption Trend of the Chinese People in 2017
7. The Chinese people are spending increasingly in items or activities for personal development and recreation. In addition to daily consumptions, education and tourism are becoming the new rigid demands of the Chinese. Similar to the previous year’s survey result, expenditures in education and tourism rank at the top of the list for willingness to spend in 2017, accounting for 26.7% and 26.3% respectively. The two are followed by savings and housing, which make up 20.8% and 20.5% of where people intend to spend. This indicates that the consumption structure of the Chinese people is shifting from subsistence-oriented to development and recreation oriented.
The Economic Confidence Index(CCI)is an indicator designed to measure people’s confidence in the economy, which uses quantitative indexes to show people’s sentiment or degree of optimism on the state and outlook of the economic conditions, employment, family income and consumption. It is a leading indicator of economic trends and comsumption, which also provides essential basis for monitoring changes in the economic cycle.
On December 28, 2016, Zijin Media Think Tank released the China’s Economic Confidence Index Report(2016-2017), also known as Zijin Economic Confidence Report, aimed to provide a quatitative and scientific indicator for predicting the coming year’s economic trends. This is the second year for the institution to conduct a nationwide survey, and based on which, to release the China’s Economic Confidence Index. Zijin Media Think Tank will continue the project and release the report at the end of every year.