Consumer Confidence Inched Up in September As Good Investment Returns Partly Offset Continued Price Concerns

Consumer Confidence Inched Up in September As Good Investment Returns Partly Offset Continued Price Concerns

September 26, 2007

    SHANGHAI, Sept. 26 /Xinhua-Finance/ -- Xinhua Finance
eziData China Consumer Confidence Index (CCCI) was updated
today, with the survey results showing that Chinese
consumer confidence rebounded slightly in September, as
continued strong investment returns boosted buying
sentiment, offsetting in part continued concerns on rising
prices and renewed concerns about current and future
personal finances. On the other hand, as the 17th China
Communist Party Congress drew near, Chinese consumers have
developed an inclination to wait for further news on
policies, hence a stagnation in their confidence.

    (Logo: http://www.xprn.com/xprn/sa/200611140926-min.gif
)

    The Xinhua Finance eziData China Consumer Confidence
Index inched up 0.3 points to 101.0 in September,
indicating a wait-and-see attitude on the part of
consumers.

    Current conditions rose 0.6 point to 100.3 in
September, as a 3.7-point gain in sentiment on durable
purchases offset a 2.3-point drop in sentiment on current
personal finances. Stronger investment returns since the
end of July have helped boost sentiment on purchasing large
durable goods and cars. Meanwhile, consumer prices are seen
nearing their peak following the 10-year high posted in
August, with the outlook for prices a year from now
falling.

    Under the support of the Xinhua Finance family, Xinhua
Finance eziData China Consumer Confidence Index is produced
monthly by eziData, a local provider of China consumer data,
and in association with Dr. Richard Curtin.  Dr. Curtin is
Research Professor and Director of the Consumer Sentiment
Surveys at the University of Michigan's Institute of Social
Research. The survey this month was conducted through 1,530
telephone interviews from September 1 to September 16.
April 2007 survey results are set as the benchmark value of
100. More on the survey methodology can be found in the
accompanying section.

    Consumers remained optimistic about the stock market
given the recent series of record highs. Even the dramatic
fall on September 11 had no effect on sentiment, as
consumers seemed to remember the market's rebound following
the government's attempt to stem price rises in late May. 

    Differences in spending behavior between income groups
became more evident this month. Lower income consumers
shifted funds to daily expenses due to rising prices, while
higher income consumers continued to increase investment.
Boosted by the continued rises of the stock market, the
trend of fund flow to investment from daily expenses which
first appeared in August became more evident this month.  

    Future expectations remained basically unchanged in
September, rising 0.2 point to 101.4, due to an improvement
in the northern part of East China, which has offset the
falls in other regions. A 1.2-point rebound in the one-year
business outlook has offset a 0.5-point decline in the
one-year outlook for personal finances, the fourth drop in
as many months. The five-year business outlook remained
stable, with only a 0.1-point loss from last month. 

    Overall confidence among those earning less than RMB
48,000 per year climbed in September by 1 point to 97.1,
with both current conditions and future expectations
rising. Among those making more than RMB 48,000 per year,
however, overall confidence declined by 0.5 point to 104.6,
as a drop in future expectations offset a gain in current
conditions. 

    Confidence among older consumers (aged 55-64) showed a
strong 3.7-point gain in September to 98.7, the highest
level in the six-month history of the index. Future
expectations rose 5.1 points as a result of the recent
government promise to raise pension levels each of the next
three years. Confidence among the middle-aged (35-54) inched
up 0.4 point to 97.2, led by a 0.7-point gain in current
conditions, due to good investment returns from the stock
market. Confidence among young consumers (aged 20-34),
however, declined by 0.3 point, after a 1.8-point drop in
August, yet remained at the highest level among age groups.


    Regional Trends

    Consumer sentiment showed a strong rise in the northern
part of East China in September but posted further declines
in the central and southern parts of East China. Sentiment
in Middle & West China rose slightly.

    Sentiment in the northern part of East China, including
Beijing, rose 2.6 points to 102.1, the highest level since
June, as a strong 4.4-point gain in future expectations
more than offset a 0.7-point drop in current conditions.
Future expectations in September fully recouped the losses
posted in the previous two months, pushing the subindex to
its highest level in survey history.  This was probably due
to the expectations that the government would take steps to
further curb house prices. Such expectations have been
reinforced recently by government action to help solving
housing problems of lower-income urban families as well as
to increase the supply of lower-priced homes, especially in
Beijing. The confidence rebound in the lower income group in
this region was much stronger than that in the higher income
group. 

    Sentiment in the central part of East China, including
Shanghai, fell by 1.2 points to 98.6 in September, with
both current conditions and future expectations declining
for the third consecutive month. All components of current
conditions declined for both income groups. The drop in
future expectations was due mainly to lower outlooks for
business conditions both in one year and in five years
among higher-income households.  

    Confidence in the southern part of East China remained
at a low level in September, with a slight 0.2-point drop
after a 2.3-point fall in August. While current conditions
improved by 1.2 points, future expectations fell by another
1.1 points after a 2.8-point decline last month. Both
one-year and five-year business outlooks declined for the
second straight month, probably due to the continued impact
of the government's July 1 policy change to discourage
exports of low-value-added products in the region's Pearl
River Delta. 

    Consumers in Middle & West China, on the other
hand, were still quite optimistic, with the confidence
index inching up 0.2 point to 102.6, as a 1.9-point gain in
current conditions more than offset a 0.7-point decline in
future expectations. While sentiment levels for the
one-year and five-year business outlooks have declined
slightly in the last two months, they remain higher than in
other regions.

    Trends in Major Cities

    Consumers in Beijing were more confident in September
than in August, while their counterparts in Shanghai and
Guangzhou remained relatively pessimistic. 

    Sentiment among Beijing consumers rebounded 2.9 points
to 100.9 in September, as a 0.7-point drop in current
conditions was overwhelmed by a strong 4.9-point gain in
future expectations, due mainly to a rebound in the future
business outlook. Future expectations in Beijing have
fluctuated sharply since the survey began in April, due to
uncertainty about the region's medium- to long-term
business prospects following the 2008 Olympics.  

    Sentiment among Shanghai consumers rebounded a slight
0.6 point in September after having fallen 5.9 points the
previous two months, but the 97.3 index level was still the
lowest of the three major cities. Current conditions fell by
1.7 points in September, while future expectations climbed
by 1.9 points. Although concerns on medium- to long-term
business outlook were soothed somewhat by recent government
policy moves to increase the supply of houses, the
wait-and-see attitude among consumers was still quite
strong given that previous government attempts to control
housing prices were largely unsuccessful.  

    In Guangzhou, consumer confidence fell to 98.5 in
September, the second straight monthly decline of 2.2
points. In contrast to August, the decline in September was
mainly due to a sharp 5-point deterioration in current
conditions, which had been stable above 100 from April to
August. Future expectations declined for the second
straight month in September, but much less than in August.



                                Apr.    May     Jun.   
Jul.    Aug.    Sept.
                                2007    2007    2007   
2007    2007    2007 
    INDEX OF CONSUMER                                      
             
     SENTIMENT                                             
              
      ALL CHINA                  100   102.2   101.6  
102.0   100.7   101.0 
      EAST CHINA                99.8     102   102.1  
101.5   100.2   100.4 
      EAST CHINA: NORTH        100.2   101.1   102.1  
100.8    99.5   102.1 
      EAST CHINA: CENTRAL        100   101.5   102.1  
100.5    99.8    98.6 
      EAST CHINA: SOUTH         99.4   103.2     102  
103.1   100.8   100.6 
      MIDDLE & WEST CHINA      100.6   102.8   100.2  
103.1   102.4   102.6 
                                                           
             
    INDEX OF CONSUMER SENTIMENT WITHIN INCOME SUBGROUPS
(ANNUAL          
     HOUSEHOLD)                                            
              
      Under RMB 48,000          95.5    97.1    95.8   
96.7    96.1    97.1 
      Over RMB 48,000          105.2     106   106.4  
106.9   105.1   104.6 
                                                           
             
    INDEX OF CONSUMER SENTIMENT WITHIN                     
             
     AGE SUBGROUPS                                         
              
      20-34                    104.2   105.9   105.9  
107.0   105.2   104.9 
      35-54                     96.4    99.2    98.3   
98.1    96.8    97.2 
      55-64                     95.8    97.7    95.5   
95.7    95.0    98.7 
                                                           
             
    COMPONENTS OF THE INDEX OF CONSUMER                    
             
     SENTIMENT                                             
              
      Current Index              100   103.1   101.4  
100.2    99.7   100.3 
      Expectations Index         100   101.7   101.6  
102.9   101.2   101.4 
      Personal Finance:        
        Current                123.8   129.2   126.8  
122.2   122.2   119.9                                      
        
      Personal Finance:         
        Expected               128.9   131.9   130.4  
129.1   128.8   128.3                                      
       
      Business Condition:       
        1 Year                 135.1   134.8   134.7  
137.8   134.3   135.5                                      
       
      Business Condition:        
        5 Years                  149   153.4   154.6  
158.1   155.0   154.9                                      
      
      Durable Buying            
        Conditions             103.4   105.1   103.4  
105.5   104.3   108.0                                      
       
                                                           
             
    INDEX OF SECTORS                                       
             
      Index of Stock              
       Investment                100    99.8   100.1  
101.0   105.9   108.3                       
      Index of Real Estate       100    97.8    99.9  
100.1    98.5    97.2 
      Index of Car Purchase      100   104.1   100.3   
98.5    95.4    96.8 

    Selected Consumer Voices:

    -- My salaries are increased and my investments are
increased. Although 
       prices are higher my life is still OK.
    -- House prices will definitely go up. You are better
off even if you buy 
       a house and lease it to someone else. 
    -- Cars will depreciate. Car prices are acceptable but
gasoline is too 
       expensive. 
    -- We are confident about the (Wenzhou) government.
They are doing a good 
       job managing the city as providing good business
conditions. 

    For more information about Xinhua Finance eziData China
Consumer Confidence Index or to subscribe to the full survey
report, please contact us [e-mail].

    Methodology

    Xinhua Finance eziData China Consumer Confidence Index
is produced in association with Dr. Richard Curtin,
Research Professor and Director of the Consumer Sentiment
Surveys at the Institute of Social Research, University of
Michigan.  The index is based on a monthly survey of around
1,500 Chinese households via stratified random sampling in
50 representative cities across East, Middle and West China
using the same methodology as is used by the University of
Michigan. All data is collected via computer assisted
telephone interviewing (CATI). Index of April 2007 survey
is set as the benchmark (100). 

    About Xinhua Finance Limited 

    Xinhua Finance Limited ("XFL") is China's
premier financial information and media service provider
and is listed on the Mothers Board of the Tokyo Stock
Exchange (symbol: 9399) (OTC ADRs: XHFNY). Bridging China's
financial markets and the world, Xinhua Finance's
proprietary content platform, comprising Indices, Ratings,
Financial News, and Investor Relations, serves financial
institutions, corporations and re-distributors worldwide. 
Through its subsidiary Xinhua Finance Media Limited
(NASDAQ: XFML), XFL leverages its content across multiple
distribution channels in China including television, radio,
newspaper, magazine and outdoor media. Founded in November
1999, XFL is headquartered in Shanghai, with offices and
news bureaus spanning 11 countries worldwide.   

    About eziData

    eziData is a local provider of China consumer data,
serving both financial and consumer market participants. It
aims to serve global and local business professionals with
decision-making tools that relate to consumption in China
and conform to international standards. eziData's
comprehensive portfolio of high-quality consumer data
products, which includes a structured real-time databank,
delivers a broader and more insightful view of the market.
For more information, please visit http://www.eziData.com
.

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http://www.xinhuafinance.com .


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