Consumer confidence drops as stocks freefall -- china.org.cn

Chinese consumer confidence dropped 3.1 points in July due to the falling stock market and concerns the United States subprime mortgage crisis will continue.

The China Consumer Confidence Index, compiled by Xinhua Finance Ltd and eziData, settled at 92 points this month, down from 95.1 points in June, the two companies said today.

The stock market, which has remained below 3,000 points since hitting a record of more than 6,000 points in October, was said to be a major cause for the index's slump.

Meanwhile, the aftermath of the US subprime mortgage crunch made people worry about its further influence, especially after the Fannie Mae and Freddie Mac's credit crisis jumped into the spotlight earlier this month.

The July consumer sentiment on current conditions was 90.9, 3.7 points lower than June. The drop was due to stock market's failure to rebound, causing investors to lose money, the report said.

The July consumer sentiment on future expectations was 92.6, down 2.6 points from a month earlier. The decline was mainly due to consumers' concerns of the subprime mortgage crisis worsening, which was expected to have a negative impact on China's future economy.

China's gross domestic product growth eased to 10.1 percent in the second quarter from 10.6 percent in the first three months of this year.

The country's Consumer Price Index, the main gauge of inflation, slowed to 7.1 percent in June from 7.7 percent in May and 8.5 percent in April.

Although officials continued to stress that the fight against inflation should still be the top priority, the central bank did not mention the word "tight" in its policy statement issued on the weekend in Beijing.

The survey was conducted through 1,555 telephone interviews this month by Xinhua Finance Ltd, a financial information and media service provider, the local China consumer data provider eziData, and in association with Richard Curtin, a research professor and director of the Consumer Sentiment Surveys at the University of Michigan's Institute of Social Research.

(Shanghai Daily July 30, 2008)