Chinese Consumers Are More Confident and Willing to Spend, Survey Shows

Consumer confidence in China's significant urban areas is on the rise, fueled by increased willingness to spend and improved financial outlook among urban residents. This shift suggests that government stimulus measures initiated in September are taking effect[para. 1]. However, despite the improved attitudes towards income and spending, many respondents have observed rising prices and there remains weak sentiment toward the property market, according to a recent quarterly consumer survey by Deutsche Bank AG[para. 2].

The survey took place in the first quarter, focusing on people aged 18 to 65 in first- and second-tier cities, though exact sample size details were not disclosed[para. 3]. Notably, this recovery in consumer sentiment and spending is aligned with the Chinese government's focus on boosting domestic consumption, as reiterated by Premier Li Qiang at the National People's Congress meeting on March 5[para. 4]. A government "special action plan" with a 30-point strategy has been published, which aims to raise consumer spending by boosting incomes, supporting consumer credit, potentially establishing a childcare subsidy system, and developing the services sector[para. 5].

Yi Xiong, Deutsche Bank’s chief China economist, highlights that the survey's findings of increased consumer sentiment could enable the government to enhance the effectiveness of its policies related to consumption[para. 6]. Financial outlook improvements are notable, with 54% of respondents in the first quarter feeling better off financially compared to 44% last year on average[para. 7]. Moreover, 60% of survey participants expect an income increase in the year ahead, marking two consecutive quarters of improvement thanks to the government’s policy stimulus since September 2024[para. 8].

Income optimism is most pronounced among residents in first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen. In particular, people over the age of 35 in these cities show increased willingness to spend, partly due to asset price recoveries, including the rise in property prices and stock market recovery[para. 9]. Among survey respondents, 52% expressed a willingness to make more discretionary purchases in the first quarter, marking an increase from 43% in the last quarter of 2024 and reaching a yearly high[para. 10].

Despite the uplifted consumer spending outlook, sentiment on the property market remains cautious. Instances of reduced spending due to property market volatility have increased for the fourth consecutive quarter, with 63% indicating spending cuts in the first quarter of 2025, a rise from 60% the previous quarter and a significant uptick from the past year in top-tier cities[para. 11]. Analysts believe a real turning point in market sentiment hinges on stable housing prices rather than increased sales volume alone[para. 13].

China's property sector has faced a prolonged crisis over the last four years, marked by plummeting prices, sales volumes, and widespread developer defaults. To stabilize the market and bolster consumer confidence, the government has ramped up interventions, with the September stimulus package partly targeting the property sector's issues[para. 16]. Recent data from the National Bureau of Statistics suggest the market might be stabilizing; while property development investment fell 9.8% year-on-year for the first two months, this decline was less severe than the 10.6% drop experienced throughout 2024[para. 17].

Additionally, the growth rate of unsold new homes by floor space has significantly slowed to 6.6% year-on-year in the first two months, contrasting with last year's peak growth rate of 24.6% over the first five months[para. 18].