Comparing Economic Developments in the Greater China through Building Chinese Consumer Confidence Indexes

Chinese consumer confidence index is the first combined confidence index for four related economies (Mainland China, Hong Kong, Macau and Taiwan) calculated through the same survey and construction methods. It enables both vertical and lateral comparisons among these economies. This paper illustrates the index construction methodology and tests how the index values vary for different consumer types, e.g. gender, income, age and education. The abilities of the indexes to compare economic development, reflect consumer expectations and satisfaction attitudes and forecast the state of the economy are also tested with the first-hand data for more than twenty quarters, collected through longitudinal surveys. The ability to predict expectations for lagged satisfaction is confirmed through regression analysis, which makes the index values reliable. The index's ability to forecast macroeconomic development is verified by Granger causality tests between the index values and the corresponding macroeconomic indicators. The index can assist governments in locating, summarizing and analyzing existing economic problems and help industries and consumers make more informed economic decisions. It can also be used as a leading indicator for some aspects of economic developments.