Chinese consumers spent cautiously in the third quarter of the year, lending less support to an economy that relies on domestic consumption.

According to a People's Bank of China (PBOC) survey, the share of depositors planning to "spend more" this quarter dropped by 0.1 per cent from the second quarter. The figure was half a percentage point down from a year earlier, the central bank said yesterday.

Depositors that plan to buy new homes, cars or other consumer durables in the next three months declined to 21.7, 9.4 and 28 per cent respectively, down 0.4, 1.2 and 1.3 percentage points from the previous quarter, the PBOC said.

"The spending patterns, after a rebound in the previous quarter, remained stable," it said in a press release.

The survey polled 20,000 respondents in 50 cities. It showed their willingness to save money rose sharply. A total of 34.7 per cent of respondents chose "save more" as the wisest option - a record high, up 3.4 per cent from a year earlier.

Only 5.9 per cent chose "stocks" as their most important financial asset, an historic low. Their lack of confidence in the bourses disappointed stock investors expecting fresh liquidity to boost the market.

The survey found people were more confident about their income situation. A total of 20.6 per cent said their income had increased, 1.8 per cent higher than last quarter. Only 10.1 per cent of those surveyed thought they earned less in the third quarter, 3 per cent down from the previous quarter.

But depositors were less happy with prices, and expected higher prices for the rest of the year. The Price Satisfaction Index dipped by 3.1 points from the previous quarter to 11.9. The Price Expectation Index jumped by 5.7 points to 14.4.

In a separate development, the PBOC said outstanding foreign exchange deposits at all financial institutions grew by 2.7 per cent on a year-on-year basis.

(China Daily September 16, 2003)