In late August,the People’s Bank of China conducted a survey on urban household savings inabout 50 cities of various sizes. There were 20,000 valid responses. Thefollowing is the summary of the survey results:

1. Current income of urban households grew steadily with confidence in theirfuture income remaining strong.

The survey showsthat, the current index of income sentiment of the urban households was 11.9,increasing by 0.1 from the previous quarter or 1.4 from a year earlier. Among thesurveyed, 22.4 percent, accelerating by 0.7 percentage points compared withlast quarter and increasing by 1.8 percentage points from a year earlier,considered their income increased.

According to thesurvey, the households’ future income confidence index was 17.4, a jump of 1.8from the previous quarter or 1.4 from last year. Among those surveyed, 23.2percent expected their income to increase and 5.8 percent expected a decrease.Generally speaking, residents remained confident in future income increase.

2． The households’ satisfaction over current price leveldecreased.

According to thesurvey, the households’ satisfaction index for current price level was -15.4,lower than that of the previous quarter. The number of those surveyed whoconsidered the price level “rather high and not acceptable” increased by 2.7percentage points from the previous quarter, and less people considered it “satisfactory”,down by 0.9 percentage points.

3.  The households’ willingness to consume continued to rise cautiously, butconsumers were less enthusiastic in purchasing homes.

The survey showsthe households’ willingness to consume continued to rise cautiously. At thepresent level of prices and interest rate, 32.3 percent of the surveyedconsidered consumption (including through borrowing) the “most sensible”choice, representing an increase of 1.1 percentage points from the previousquarter. The willingness to consume has grown continuously for two months, reboundedafter the sharp fall of the index in the first quarter, it was still 0.6percentage points lower on a year-on-year basis. The survey shows thathouseholds planning to buy large item consumer goods in the coming quarterreached 27.6 percent, down by 0.3 percentage points from the previous quarteror 0.4 percentage points on a year-on-year basis. 20.1 percent of the surveyedplanned to purchase homes in the coming quarter, a decrease of 1.2 percentagepoints from the previous quarter or 1.6 from last year. And households plannedto purchase cars in the next quarter was 10.5 percent, 0.4 percentage pointshigher compared with the previous quarter or 1.1 percentage points higher on ayear-on-year basis.

4.        Influencedby the bearish stock market, the urban households’ enthusiasm for investment instocks and mutual funds weakened while their willingness to save picked up. Thepurposes of saving remained stable.

The statisticsshow that, the outstanding deposits amounted to 11.4 trillion yuan at the endof August, increasing by 15.3 percent on a year-on-year basis, 0.6 and 4.7percentage points lower than end-July and a year earlier respectively. Thegrowth of RMB savings deposits fell for seven months in a row. However,according to the survey, the households’ willingness to save stopped decline.At the present level of prices and interest rate, 33.4 percent surveyedconsidered "to save more" the most sensible choice, representing an increase of1.2 percentage points from last quarter, still a relatively low level in recenttwo years. The decreasing enthusiasm for investment in stocks and mutual funds constitutedthe main cause of the rebound in saving willingness. According to the survey,at the present level of prices and interest rate, 7.9 percent surveyed considered"to buy stocks or mutual funds" the most sensible choice, down by 2.7percentage points from the previous quarter.

According to thesurvey on uses of households savings, “save for education” remained the firstchoice, “save for pension”, “save for purchasing homes and decoration” and “savefor emergencies” etc. remained stable.