China Consumer Confidence Slips but Still Strong

China’s consumer confidence slipped 3 points in the second quarter, the first decline this year, amid growing inflation worries, according to a report by The Nielsen Co released on Tuesday.

Among China’s top-tier cities Guangzhou had the highest level of consumer confidence at 106. Beijing’s rose a point to 100 while Shanghai’s was unchanged at 99. Rural consumers continued to enjoy the highest confidence level, though the current index of 109 reflects a 4-point drop in the latest quarter.

Overall, with an index of 105, China continues to enjoy far more robust consumer confidence than the rest of the world.

Global online consumer confidence fell 3 index points from 92 to 89, the lowest since the fourth quarter of 2009, according to Nielsen. Confidence in the United States fell 5 index points to 78, 2 points lower than the 80 points recorded in the first half of 2009 at the height of the global recession.

“Although China’s consumer confidence is also likely to be affected by the global economic turbulence in the coming quarter, there will not be big swings because the country’s economic fundamentals remain strong and people’s incomes are seeing a gradual improvement,” said Karthik Rao, managing director of Nielsen Greater China.

Rao said that the 3-point drop in the first quarter was driven mainly by declining consumer expectations regarding incomes during the latest quarter.

“As the ongoing sovereign debt crises in the U.S. and the European Union (EU) increase global economic uncertainties, we expect global consumer confidence to slide further in the third quarter,” said Rao.

Chinese GDP growth is expected to be 8.9 percent for 2011, down from from 9.1 percent in 2010, according to projections by Ma Jun, chief China economist of Deutsche Bank AG. Growth is expected to slide further to 8.3 percent for 2012 due to a downturn in export growth because of the debt crises in the EU and the U.S.

Ma Jun, chief China economist of Deutsche Bank AG, said in a research note on Tuesday that the bank has cut its baseline projection for Chinese GDP growth to 8.9 percent for 2011 (from 9.1 percent), and to 8.3 percent for 2012 (from 8.6 percent), largely reflecting the downturn in export growth because of the debt crises in the EU and US.