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China's Consumer Confidence on the Rise - 2003-02-05

A new survey shows that consumers in China are far more confident than consumers in Taiwan, Japan and Korea. In Hong Kong, confidence is beginning to rebound from record lows.

China's economy grew about eight percent last year, and many consumers are beginning to feel their newfound wealth.

A recent survey by MasterCard International measured consumer sentiment studied people's expectations about job prospects, income and stock markets. China registered the highest score in the Asia Pacific region - coming in at 84 points.

The story is different in the territory of Hong Kong, where positive sentiment lags far behind the mainland. Still, the territory's score of 21 was a rise in confidence from 14 in the last survey, six months ago.

Yuwa Hendrick-Wong is an economic advisor to MasterCard. He says Hong Kong households are sitting on an average of $200,000 in cash and that luring consumers to part with their money could be the key that unlocks economic growth.

"So that's the challenge of Hong Kong, how to close the gap between the improving fundamentals and the persistent pessimism of the consumers," he said.

Prices in Hong Kong fell for the 50th month in a row in December. Although the decrease in prices was less dramatic than in previous months, deflation indicates poor consumer demand, which drives prices lower and hurts corporate profits.

Elsewhere, the MasterCard survey shows that Japan has the gloomiest consumers in Asia. The Japanese index registered a score of fifteen.

South Korean and Taiwanese consumers are also in the grip of a confidence crisis, with their index scores dropping dramatically in recent months. In South Korea, confidence fell to 39, down from 76 six months ago. And in Taiwan, the index fell to 40 from 59.