Chinese consumers spending

I had earlier written about why consumer sentiment's important, stating, 'I fear the biggest fallout of this recession would be on consumer sentiment. People, cutting back on purchases, on speculating on a depressed economic future. That would be dangerous as it would then 'down' disposable incomes, down consumption and that cycle surely will lead to a catastrophe.'

WSJ reports that the Chinese government has been able to spur consumption by ensuring the right sentiment's in place.

'A torrent of bank lending, spurred by the government, is increasing investment in China. Consumers are out shopping in response to incentives such as lower mortgage rates and tax cuts on car purchases. Economic growth slowed to 6.1% in the first quarter, as retail sales, after adjusting for price changes, rose 15.9% for the period. While that was slower than the 17.7% rise in spending in the fourth quarter of last year, economists say the growth in consumption is encouraging given rising unemployment in the country and the contrast with shrinking consumption in other major economies.

Auto makers in particular are benefiting. Vehicle sales in China climbed 5% to a record 1.11 million units in March -- a tentative turnaround from last autumn, when car sales slowed significantly. Luxury brands performed well. Daimler AG's Mercedes-Benz unit and Audi AG rang up their highest China sales in March. So did General Motors Corp., which sells, in joint ventures with local auto makers, Buick, Chevy and Cadillac cars, as well as the micro minivans increasingly popular in rural areas.'


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