China's consumer confidence remains stable in Q3

China's third-quarter consumer confidence index (CCI) remained unchanged from the previous quarter at 110, but is still 4 points higher from one year ago, according to a report released Tuesday by Nielsen Holdings.

Fourth-tier cities were seen as being a major driver of the stable consumer confidence in the third quarter, the report said.

The third-quarter CCI of fourth-tier cities' residents rose by 2 index points to 109 from the second quarter, an -increase of 5 points compared with the final quarter of last year.

In comparison, the third-quarter CCI of first- and third-tier cities both dropped from the previous quarter, while second-tier cities saw a rise of 1 point in their CCI reading during the quarter.

"The fourth-tier cities, many of which are located at the crossroads of rural and urban China, are always regarded as regional centers for rural consumers to shop around or to have a tryout of city life," said Patrick Dodd, managing director of Nielsen China.

"The expansion by both multinational and local Chinese companies and retailers into lower-tier cities will further unlock the consumers' purchase power in these emerging markets," Dodd said.

The Chinese central government has been trying to shift the growth pattern of its GDP to be more reliant on domestic consumption and less on investment, which is considered to be unsustainable.

Zhang Lei, a Beijing-based macroeconomic analyst with Minsheng Securities, told the Global Times Tuesday that residents of fourth-tier cities are more confident because they face less stress in buying homes and their income has remained stable.

"Residents of first- and second-tier cities are pressured by high living expenses, and their income has been sliding due to the slow economy. Both reasons dampen the residents' confidence and willingness to buy," Zhang said.

Dodd said that the consumption level of less developed regions has huge potential to grow.

"Fourth-tier cities are a dream for marketers, because rural households are migrating between fourth-tier cities and the countryside frequently and they spend money in both regions," he said.

Some 86 million households, whose total income value is 3 trillion yuan ($492 billion), live in China's fourth-tier cities, and 169 million rural households, who have 4 trillion yuan of income, live in rural areas, said the report.

Both types of households are potential consumers for companies, Dodd believes.

Residents in the urban areas spent 13.1 percent more in October than in September, and those living in rural regions spent 14.6 percent more in -October than in September, the Ministry of Commerce said Tuesday.

Lynn Xu, vice president of Nielsen Greater China, said that fourth-tier cities and rural areas will experience "explosive growth in online shopping" once more of their residents start using smartphones.