Chinese consumers' confidence has picked up in the second quarter, with those living in towns and villages more confident than those in big cities, a Nielsen survey revealed yesterday.

"Many consumers in tier- four and tier-five cities, mainly towns and villages, appear to have been less affected by the downturn in the first place, so recovery is less of an issue for them. In fact, many of those cities are still on the earlier part of the growth curve," said Mitch Barns, Greater China President of the Nielsen Company.

According to the Nielsen Global Consumer Confidence Index, the largest survey of its kind, Chinese consumers' index was up 6 percentage points than the previous quarter, climbing in the global list to the sixth place from tenth in the second quarter.

"The key driver behind Chinese consumers' confidence is improved job prospects," said Barns.

According to the survey, half of the Chinese consumers said local job prospects in the next 12 months would be "good" or "excellent", compared to only 22 percent three months ago.

Confidence is especially strong in North China and tier-five cites, with more than half of consumers in those areas having a positive outlook about local job prospects in the next 12 months.

"This is one of the strongest indicators of a consensus among consumers that the worst is over, and that finally, there is light at the end of this long tunnel," Barns added.

Meanwhile, the state of Chinese consumers' personal finances has marginally improved along with job prospects, with nearly half of Chinese consumers describing their personal finances in the next 12 months as "good" or "excellent".

However, Chinese consumers are slightly more conservative in their expenditure, especially in the west of China. More than four in 10 Chinese consumers (41 percent) described their willingness to spend in the next 12 months as "good" or excellent", down eight percentage points from last quarter.

"Consumers in China are still spending but they do seem to be expecting prices to be on the increase over the next 12 months and this is affecting their spending somewhat," said Barns.

After covering all living expenses and essential living items, Chinese consumers have prioritized their children's education, with more than four in 10 consumers (42 percent) saying they would use their spare cash for children's education.

However, tier-one cities' consumers are more likely to allocate their spare cash to investing on the stock market (50 percent) and holidays (47 percent) compared to consumers in tier-five cities, who are more likely to spend their spare cash on their children (22 percent).

Consumers in tier 2, 3 and 4 cities said they would spend on education for children as well as entertainment.

The Nielsen survey interviewed consumers in 28 countries in late June, including 3,500 consumers in China, to gauge the latest consumer sentiment and confidence along with spending, saving and investment plans.

(China Daily July 31, 2009)