Consumer Confidence Rebounds Slightly in July

Consumer Confidence Rebounds Slightly in July

July 25, 2007

As Stronger Outlook Offsets Weaker Current Conditions


    SHANGHAI, China, July 25 /Xinhua-PRNewswire/ -- Xinhua
Finance eziData China Consumer Confidence Index (CCCI) was
updated today, with the survey results showing a slight
rebound in Chinese consumer confidence in July, as a jump
in future expectations offset continued deterioration in
sentiment over current conditions.

    (Logo: http://www.xprn.com/xprn/sa/200702151700.gif )

    The Index rose 0.4 point to 102.0 in July, but remained
slightly below the 102.2 reading in May.

    The relative stability in July resulted from a series
of sub-trends -- including steadily rising food prices,
rebounding housing prices and fluctuating stock market
prices -- that tended to counteract each other. 

    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 1,546
telephone interviews from July 1 to July13. April 2007
survey results are set as the benchmark value of 100. More
on the survey methodology can be found in the accompanying
section.

    Current conditions eased 1.2 points to 100.2 in July,
the second consecutive monthly decline, under the direct
influence of rising concern on consumer prices and lower
stock market returns. The decline was led by current
personal finances, which fell 4.6 points to 122.2. Despite
this, sentiment on whether it was a good time to buy
higher-cost durable goods like furniture and appliances
rose 2.1 points to its highest level in the four-month
history of the index. A rising desire to own a car was
offset by an even stronger increase in expectations for
higher gasoline prices.

    In contrast, future expectations rose by 1.3 points to
102.9 in July, led by gains in both the one-year business
outlook (3.1-point rise) and five-year business outlook
(3.5-point rise). On the other hand, expectations on
personal finance in one year fell for the second month in a
row (down 1.3 points), affected by the declining sentiment
on current personal finances.

    The gain in confidence in July was due largely to
improved sentiment among the youngest group surveyed, those
20-34 years old (+1.1 points). Sentiment among both
middle-aged (35-54 years old) and older (55-64 years old)
consumers, who tend to be more sensitive to changes in
food, housing and stock market prices, was basically
stable.

    The stability of overall sentiment for middle-aged and
older consumers masked differing trends based on a
combination of age and income. For older people who make
less than RMB 48,000 per year, the continued rise in
general prices, particularly for food, has had a strong
negative impact on their lives. However, for middle-aged
consumers who make more than RMB 48,000 per year, the drop
in current conditions was due largely to lower investment
returns.

    Regional Trends

    Consumer sentiment showed strong regional differences
in July. While sentiment in the northern and central parts
of East China declined by 1.3 and 1.6 points, respectively,
it climbed 1.1 and 2.9 points in the southern part of East
China and in Middle & West China. Changes in views on
food prices and house prices, as well as stock market
prices, have contributed to the above trends.

    In the northern part of East China, the decline was led
by a 2.1-point drop among older consumers and a 1.7-point
drop among the middle-aged. While overall sentiment among
the younger generation inched down only 0.4 point, a larger
drop was seen among those with lower incomes.

    Although current conditions in this region fell only
0.3 point, current personal finance (down 2.8 points) has
been severely undermined by rising prices and lower
investment returns. The decline was however offset by a
rise in durable purchase sentiment, which was probably due
to the fund flow back from stock market investment. The
expectations index, however, tumbled 1.9 points, led by
concern among the higher-income group that the recent
strong rise in housing prices might hurt longer term
conditions in the area, particularly in Beijing.

    The central part of East China showed a decline in
current conditions by 3.6 points -- led by a 6.8-point
plunge in current personal finance -- and in the future
outlook by 0.5 point. Sentiment among the middle aged fell
by 3.8 points, led by a plunge in sentiment among Shanghai
consumers. Confidence also dropped among the younger
generation, while sentiment among the oldest rebounded by
2.9 points after a 7.3-point drop in June.

    The decline in the current conditions in this region
was also a result of higher prices and lower investment
returns, which particularly affected the middle-aged
consumers. Interestingly, although home prices rose again,
consumers were somewhat indifferent as prices have been at
high levels in the area for quite some time. The future
outlook was not significantly affected by this factor.

    Similarly, the 2.8-point drop in current conditions in
the southern part of East China was also led by middle-aged
and older consumers. However, with the 10-year anniversary
of the return of Hong Kong to Mainland China being
celebrated during the month, neighboring southern China
turned more optimistic about the area's future, resulting
in a 3.2-point gain in the expectations index and so a
slight increase in overall sentiment. However, the more
buoyant outlook did not reach all consumers: confidence
among the older group, who are not as involved in economic
activities, showed a 9.4-point plunge in July.

    Middle & West China was the only region where both
current conditions and the future outlook increased in July
(by 1.9 points and 3.4 points, respectively). The latter was
led by an 8-point gain in five-year business outlook. At the
same time, trends within age groups tended to reconcile.
Sentiment for both young and middle-aged consumers rose
more than three points, while that of the older group
gained 1.8 points.

    In Middle & West China, the rise in current
conditions was also due largely to the rise in the large
durable purchase sentiment. More noteworthy was the sharp
gain in the future outlook -- this area had an advantage of
being at a lower level of development than the east, and its
people were filled with universal confidence on the future.
Although housing prices also continued to rise rapidly in
Middle & West China, and consumers say that current
homes are too expensive, the relatively lower prices
compared to other parts of the country caused consumers to
want to invest in the real estate market. Expectations of a
profitable return on housing investment contributed to the
rise in the overall outlook for the region.

    Trends in Major Cities

    Consumers in Beijing and Shanghai were less confident
in July than in June, while their counterparts in Guangzhou
were more optimistic.

    Sentiment among Beijing consumers plunged 4.2 points to
97.8, the lowest level in the index's history. Current
conditions (-2.0 points) and expectations (-5.4 points)
also dropped to their lowest level in four months.

    Sentiment on current household finances varied by
income group. For families making less than RMB 48,000 per
year, the sharp drop was probably due to rising consumer
prices. While sentiment on current finances among those
making more than RMB 48,000 per year remained relatively
stable, the five-year outlook on business conditions
declined sharply. Over the past four months, sentiment on
long term business conditions in the higher income group
has fluctuated significantly, reflecting uncertainly about
business conditions after the Olympics. Many expressed
concern that the current pre-Olympic economic boom,
particularly the run-up in local housing prices, will come
to an abrupt halt after Games end in August next year.

    Sentiment among Shanghai consumers dropped 4.4 points
in July, as a sharp 6.8-point decline in current conditions
more than erased the gains posted in the last two months.
The expectations index declined 3.1 points. The recent
fluctuations in the stock market, combined with the rise in
consumer prices, led to a sharp drop in the one-year outlook
for personal finances. Shanghai consumers also expressed
concern that high home prices would potentially weaken the
economic development of the area. In addition, after a long
period of ineffective government policies, Shanghai
consumers were less optimistic about future housing prices,
causing a drop in the five-year outlook for business
conditions.

    In contrast to Beijing and Shanghai, Guangzhou
consumers were much more optimistic in July, with the
overall sentiment index gaining 4.0 points to 102.9.
Sentiment on current conditions rose a modest 0.4 point,
while future expectations jumped 6.0 points. Significant
rises were posted in both the one-year personal finance
outlook as well as the one-year and five-year business
outlooks, with no major differences between income groups.
As the 10th anniversary of the return of Hong Kong to
Mainland China may have posed a major impact on the above
changes in July, the survey result of August would help
further clarify the trends within this area.



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



    Selected Consumer Voices

    -- Meat is so expensive that we are eating vegetable
all day. Well, I'm 
       sure it's good to our health.
    -- I'm very confident about Chongqing's future. We
surely will outperform 
       Hong Kong in five years.
    -- Houses are so expensive today, but I have to prepare
for the future. If 
       I don't buy now I will never be able to afford it.

    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). 

    Notes to editors:
    About Xinhua Finance Limited 
    Xinhua Finance Limited 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), Xinhua Finance
leverages its content across multiple distribution channels
in China including television, radio, newspaper, magazine
and outdoor media. Founded in November 1999, Xinhua Finance
is headquartered in Shanghai, with offices and news bureaus
spanning 11 countries worldwide.   

    For more information, please visit
http://www.xinhuafinance.com . 

    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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