According to the results of a survey carried out and released by the central bank in late December, in the fourth quarter a higher proportion of urban resident respondents expressed satisfaction with their income for the period.

In the fourth quarter, 28.5 percent of urban residents expected increased income for the period, 2.6 percent and 6.1 percent higher than that for the previous quarter and the same quarter in 2005, respectively. Income sentiment hit 22.6 percent, 4.1 percent higher than the previous quarter and 8.3 percent higher than that of the same period of the previous year. People were optimistic about their income for next quarter, with 30.7 percent expecting a higher income, up 3.2 percent than the third quarter. The expectation index for future income reached 27.1 percent, a record high.

However, residents' satisfaction over prices slid for the third consecutive quarter in the last quarter of 2006. Only 10.8 percent were satisfied with the prices, down 0.2 percent from the previous quarter and 1.3 percent year on year, a record low. But there emerged minor changes: the proportion that felt prices to be "unreasonably" high was 0.3 percent lower than the previous quarter, attributing to a turning point in the continuous dissatisfaction over prices. On the other hand, those that believed prices were "high but acceptable" climbed to 64.4 percent, 0.4 percent higher than the third quarter.

On a geographical basis, a smaller proportion of residents in larger cities were satisfied with current prices, at some 9.9 percent, one percent lower than mid-sized cities and 1.5 percent lower than small cities. Expectations over rising prices were high - 50.8 percent of residents expected prices to rise. The expectation index for future prices was 48.2 percent, a record high since 1999 when the first survey was conducted.

In addition, more residents were willing to accept the deposit interest rates, with 40 percent believing the rates were set on proper levels. But the proportion that deposited their money in banks in order to gain interest declined. To be specific, 42.8 percent believed that the deposit interest rates were set properly by commercial banks, up 5.4 percent and 6.5 percent compared with the previous quarter and the same period of the year before respectively, a record high. In the meantime, depositors saving for the purpose of gaining interest returns declined for the third quarter in a row, down 0.02 percent and 0.4 percent, which was mainly due to the emerging wealth management products that might generate higher returns.
 
Residents were more acquainted with the concept of wealth management and fund investment products became popular. The survey revealed that 18.5 percent chose "intending to buy stocks or fund products" as an outlet of their disposable income, again a record high, while those choosing "saving in banks" accounted for 65.8 percent, down 2.4 percent and 3.6 percent than the third quarter of 2006 and fourth quarter of 2005 respectively, and 1.4 percent lower than the overall average of 67.2 percentage points ever since the first survey was taken years ago. Those choosing "fund products" as an investment channel increased from 6.7 percent in the previous quarter to 10 percent this quarter, up 3.3 percent year on year. Total assets over fund products ranked second to bank savings as a value storage means of urban households.

The survey also detected some changes in the purposes of savings by residents. The share of the "traditional" incentives for saving such as education, pension and medical expense, compensation for unemployment and loss from accidents, declined for the first time. These three types accounted for 4.3 percent, 1.2 percent and 2.4 percent less than those in the previous quarter.

In addition, residents' inclination toward purchasing houses rose slightly. Those that expressed the wish to buy a house within the coming three months were up 0.3 percent over the previous quarter. But the proportion of population in Beijing, Shanghai, Tianjin and Chongqing, the four municipalities, shrank for the second month in a row. Provincial capitals like Changchun, Zhengzhou, Nanchang, Xi'an, Hangzhou, Guiyang, Kunming and Xining saw a higher proportion of their residents willing to buy houses. Yearly, resident's house-buying inclinations have declined from the average 19.7 percent for 2005 to 17.8 percent last year.

The survey was conducted by the People's Bank of China in 50 large, medium- and small cities and 20,000 questionnaires were collected in November.

Editor: Yan