Release of Zijin Economic Confidence Index for the Third Year: Continuous Rise in Citizen’s Economic Confidence
After the release of Zijin Economic Confidence Index Report for two consecutive years of 2015 and 2016, warm feedbacks arose in the society. Today, Zijin Media Think Tank released its signature report for the third year in Jiangbei New Area, Nanjing. The report is comprised of two parts, the Chinese Citizen’s Economic Confidence Report (2017-2018) and the China’s Economic Confidence Big Data Report (2017), which reflect Chinese people’s economic confidence from different angles and predict the tendency of China’s economic development in the future. The signing ceremony of co-constructing Jiangsu Zijin Jiangbei New Area Innovation Research Institute by Jiangbei New Area Management Committee and Zijin Media Think Tank was also held.
Chinese Citizen’s Economic Confidence Report is based on a telephone survey of 5300 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 Chinese Citizen’s Economic Confidence Report are as follows:
1. An increase of 10% in 2017, surpassing 70 in the overall economic confidence.
The huge lift in citizen’s economic confidence this year is related to the successful conclusion of the 19th CPC National Congress. The survey shows that 78.72% of the respondents hold the belief that the 19th CPC National Congress will boost China’s economy. In the background of global economic recovery, the goal of “beautiful life” proposed in the 19th CPC National Congress and the regulation of house price undoubtedly put the general public at ease. What’s more, the year of 2017 is an important year of the 13rd “Five-Year Plan”. It has witnessed that the structural reform of supply side is continuously deepening, the stability of macro economy has improved, and the strategic emerging industries and high-tech industries have maintained a relatively fast growth. The statistics show that the GDP of the first three quarters increased 6.9% on a year-on-year basis. The economy achieved the growth rate between 6.7% and 6.9% for nine consecutive quarters. The national disposable income per capita in the same period was 19,342 yuan, a nominal increase of 9.1%, an actual increase of 7.5% after adjusting for the inflation, which was still higher than the economic growth rate. Besides, the reform of supply side, the revitalization of real economy and innovative drives, all these factors combining with favorable state policies ensure the growth of our economy in the reason range and also strengthen the public’s economic confidence.
2. People with higher income and higher education background tend to have more confidence in the national overall economy.
In the group with the monthly income over 1,000, people’s overall economic confidence goes up with the increase of income. Especially those with a monthly income over 10,000 rank atop in terms of overall economic confidence. However, this group only ranked the second place last year. Their confidence index marks 67.37, nearly 1.5 higher than that of the group with a monthly income from 5,001 to 10,000. People with a bachelor degree or above have the most confidence in the overall economic development. People with more income and senior intellectuals command more information and are more rational. Their predictions on the economic climate can be regarded as a sound indicator for the economy development.
3. The low-income group’s confidence has made into the optimism range, but is still lower than expected and surpassed by the middle-income group: Mathew Effect becomes more conspicuous.
To some extent, the low-income group’s confidence in the current economy demonstrates the effect of our economic reform. The low-income group’s economic confidence reached 51.90 in 2017, compared to 47.08 in last year, which shows that the low-income groups transcend from the optimism range to the pessimism one. This also verifies the depth and scale of our economic reform. This is a gap of 17.22 between the low-income group’s actual economic confidence index and the expected index. In contrast, the gap is only 9.35 regarding the middle-income group. The difference (7.87) between the two gaps is greater than it was last year (4.81). The more rational and conservative middle-income group shows more confidence than the low-income group does, which is different from what it was.
4. The first-tier cities return to the first echelon, in which Shenzhen rises the fastest. The development of new economy drives the people’s economic confidence up.
The first-tier cities, represented by Beijing, Shanghai and Shenzhen, regained the first place, achieving 65.57 in the overall economic confidence, higher than the second- and third-tier cities. This is due to the house price regulation in 2017. The housing pressure has permeated to the second- and third-tier cities, which hampered the people’s confidence in the economy. However, the purchasing limitation in the first-tier cities has become stricter and has restricted the house price, which uplifted the people’s economic confidence. It can be seen that house prices play a huge role in people’s economic confidence.
Shenzhen is the most remarkable city in this year’s research. It goes up from the tenth place (57.91) to the second place (66.80), having increased by 15.4%, the biggest rise in the 13 cities. This is probably because Shenzhen is steady in economy and its economic growth rate ranks atop nationally. It may also owe to the fact that Shenzhen has transformed from the traditional economy to the Internet economy. In comparison to Shenzhen, Luoyang and Tieling are lagging behind in the transformation and upgrade of industries, and the traditional industry becomes weak. Therefore, economic confidence in these cities are rather low.
5. In the four aspects of economic confidence index, the confidence in the employment condition has marched into the optimism range for the first time; the overall economic confidence index sees the greatest leap; and willingness to spend index has went up slightly.
The confidence index of employment condition is still lower than that of the economic situation, the total family income and the willingness to spend in 2017. It’s worth mentioning that the current confidence index of employment condition has exceeded the base line (50) for the first time, which means people are satisfied with the current employment condition for the first time over the last three years. The government has implemented various policies to boost employment and improve the environment for starting new business. These efforts have paid off.
The confidence index of the economic situation and the employment condition, two macro aspects, both have seen relatively big increase. Compared to those in 2016, they have increased by 25.65% and 12.23% respectively. In contrast, the confidence index of the total family income and the willingness to spend, two micro aspects, only go up slightly, both with an increase less than 10%, and the latter only by 3.13%. The disparity between the macro level and the micro level shows, to some extent, the public’s cognition that the state economic growth is faster than that of the people. What the government need to do in the near future is how let people share the achievements gained from reform.
6. The willingness to spend in the third-tier cities is greater than that in the first- and second-tier ones. People become less willing to buy houses in the first-tier cities, which results in the decline of willingness to spend.
The index of the expected willingness to spend in 2017 increases with the decline of the development of cities, which is reverse to the situation in 2016. The index of the willingness to spend of the third-tier cities come atop, while the first-tier cities come at the bottom, and the expected willingness to spend also decreased from 71.25 to 71.00 in the first-tier cities. Comparing the willingness to spend in different items, the research team finds that people become less willing to buy homes in the first-tier cities. In comparison with the big rise in the willingness to buy homes in the second- and third-tier cities, this change with the people in the first cities is conspicuous. It is our speculation that the purchasing limits proposed in the report at the 19th CPC National Congress have constrained some people’s property speculation desire.
7. In people’s plan of spending and investing in 2018, education, tourism and digital products occupy a greater part, while bank saving and daily spending occupy a smaller portion: the transformation of consumption structure continues.
Among all consumer goods, education and tourism are still the hot spot apart from daily consumption. With the upgrade of consumption ideas, more and more people are willing to spend on education and tourism. In contrast with the situation in last year, education and tourism have seen an increase by 9% and 6% respectively, while the daily consumption has decreased by 3%.
Apart from daily spending, saving is the only category that people’s willingness to spend decreased among other consumptions. With the promotion of mobile payment and Internet finance, fewer people choose to deposit their money in banks. According to a survey conducted by Tecent, the fluid capitals of 37% users decreased in 2016; among these users, 79% have transferred their capital to new finance platforms; 85% of the users are accustomed to paying via cellphone in daily consumption. The efficiency, speediness and simplicity of the Internet finance have attracted a lot of people to transfer their capital from banking saving to Internet capital management tools. In the future, the need for saving may go down even further.
8. In age’s terms, the overall confidence index takes a U-shape, with the group aged from 40 to 49 on the bottom for three consecutive years. From the detailed dimension, the post-90s hold the lowest confidence index regarding to current economic situation, but there are hopeful of the future.
In regards to the relation between the overall economic confidence index and the age, the research result shows high stability and consistency. The group aged from 40 years old to 49 have the lowest confidence in our country’s economy. These people are in the middle of their life. Their children are about to get married, their parents’ health go down, and they walk into the plateau in their career. Pressures from all side lead them into the midlife crisis. Thus, they are less contented with their current life and have lower expectation of the future. In contrast, the senior citizens have backed out from the labour market, and the young haven’t or just have stepped into this market. Their perception of the economic situation is less keen than the middle-aged. Their optimism about China’s economy reflects their satisfaction of their own living condition and the country’s overall economic situation.
In the detailed dimension, the group aged from 18 to 29 have the least confidence in the current domestic income. This is probably because that these people are just starting on their own and they can get a job with high salary. This awkward situation affects their satisfaction of the current domestic income. But the confidence in the current domestic income hasn’t affected this group’s confidence in the future domestic income. Their confidence index of the future domestic income almost makes to 80. This group may be a driving force for China’s economy as the result of their efforts indicated by their confidence in the future domestic income.
9. In terms of economic confidence, the optimistic group is generally ten percent higher than the pessimistic group. In all the thirteen cities, the percentage of the optimistic group is higher than the pessimistic one, with Nanjing’s optimistic group reaching over 60%.
Through a two-step cluster analysis, the interviewees are automatically classified into the optimistic group and the pessimistic group. The optimistic group (54.6%) is still almost ten percent higher than the pessimistic one (45.4%), which is almost the same as the last year. What distinguishes the optimistic group and the pessimistic group is the judgement of the economy and the employment situation. According to the two-step cluster analysis’s list of factors, the most important factors are the general prospect of the economic development in the coming year and the overall situation of the country’s economic development. The less important factors are the overall employment situation and the employment prospect in the coming year. The least important factor is the satisfaction of the total family income in this year. Different from last year, in this year the current economic, employment and family income situations affect what attitude the interviewees would hold.
The optimistic group outnumbers the pessimistic one in all the thirteen cities. Nanjing has the biggest optimistic group, up to 61.8%. Classifying the thirteen cities into first-tier cities, second-tier and third-tier, we find that the optimistic group has the biggest share in the first-tier cities. The difference between the optimistic and the pessimistic almost marks ten percent. The second-tier cities and third-tier cities follow in the lead.