In late May, the People's Bank of Chinaconducted a survey on urban household savings in about 50 cities in varioussizes. There were 20,000 valid responses. The following is the summary of thesurvey results.

 

1.        Thehouseholds' satisfaction over current price level was low and householdexpectations of future price development were less optimistic.

 

According to the survey, the households'satisfaction index for current price level was -11.8, the lowest level since1999 when the survey was first conducted. 24.8 percent of the surveyedconsidered the price level "excessively high and not acceptable," 6.8 and 10.8 percentagepoints higher than previous quarter and previous year respectively. 13 percent ofthe surveyed considered it "satisfactory", a drop of 7.9 and 16 percentagepoints compared to the previous quarter and the previous year respectively.With regard to household expectations of future price development, 39.6 percentof the surveyed expected prices to rise next quarter while only 7.1 percentforesaw a decline.

 

2.        Thehouseholds' willingness to consume resurged cautiously.

 

The survey shows that, at the presentlevel of prices and interest rate, only 31.2 percent of the surveyed consideredconsumption (including financed with debt) the "most sensible" choice,representing an increase of 0.4 percentage points from the previous quarter anddown by 2.4 percentage points year-on-year, close to the historical low levelsince 2002.

 

3.        Theurban households' acceptance of current interest level declined, and their willingnessto save was weakened.

 

The survey shows, 72.9 percent of the surveyedconsidered interest rates low, up 2.2 percentage points compared with previousquarter or 2.6 percentage points year-on-year. 25.9 percent of the respondents consideredinterest rates "acceptable", declining by 2 and 2.4 percentage points from theprevious quarter and the same period of last year respectively.

 

The urban households low acceptance ofcurrent interest level resulted in their weakened willingness to save. Thesurvey shows, at the current level of prices and interest rate, 32.2 percent ofthe households chose to "save more", down 5.4 percentage points compared to theprevious quarter or 1.1 percentage points year-on-year. 14.9 percent of thesurveyed chose to "withdraw bank savings to buy government bonds", up 3percentage points compared to the previous quarter or 1 percentage pointyear-on-year. 10.6 percent of the households chose to "withdraw bank savings tobuy stocks or mutual funds", 3.4 percentage points higher on year-on-yearbasis.