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In a quarterly survey of household wealth and income, researchers at a Chinese university found that their index of families expected future spending was even lower than the early days of Covid pandemic.
In the China Household Wealth Index Survey conducted by Southwestern University of Finance and Economics in Chengdu, Sichuan province, the index of spending expectations fell to 101.9 in the first quarter of this year, down from 103.0 in the fourth quarter of 2023.
The survey measures the spending plans of households with an average of 1.5 million yuan (US$207,000) in combined property and financial assets.
The families in the survey expressed particular caution about buying real estate. The proportion of households buying new homes fell to 6.4 per cent in the first quarter of this year from 7.5 per cent in the final quarter of 2023.
Only 6.8 per cent of households said they planned to buy property in the next three months. Over 20 per cent of households said they would take a wait-and-watch approach.In the spending index, a reading of 100 is the dividing line between expansion in spending plans and contraction.
China's economic expansion has been largely manufacturing-based. But given the US-China trade war headwinds, Beijing is now focusing on driving the economy on a more consumption-based vehicle. But with exports facing external headwinds and in debt weighing on investment prospects, the road to further expansion of the economy looks gloomier than previously expected. China’s GDP expanded 5.3 per cent year on year in the first quarter, with domestic consumption contributing 73.7 per cent to economic growth, according to the country's National Bureau of Statistics.
The report on the university’s survey also said that 62.3 per cent of respondents were not optimistic about economic prospects in the next 12 months, down from 66.4 per cent three months earlier.
