"Thanks to a stabilized GDP growth rate, a resilient labor market and steady household income growth Chinese consumer confidence grew in the last quarter of 2013," Nielsen Greater China President Yan Xuan said. Better job prospects and stronger spending intentions are the most important factors in the improvement, he said.
"The key challenges are translating this confidence into actual purchase power and further improving the domestic consumption's contribution to the overall GDP," Mr. Yan added.
The risk of incurring high health-care costs is a large worry for consumers and contributes to a high savings rate, Nielsen said.
Much of the improvement in consumer confidence was recorded in tier two and three cities outside of the largest urban centers. Chongqing, Xi'an and Suzhou are cities with huge potential for consumer spending growth, Nielsen said.
A more consumption-driven economy is required for growth, many economists argue saying a reliance on investment is reaching its limits.
Gross domestic product grew by 7.7% on year in the final quarter of 2013 compared with 7.8% in the third quarter. Retail sales grew 13.6% on year in December, according to official statistics.
Wages rose while unemployment was contained. There were 110 vacancies for every 100 job seekers in December, according to a regular survey by the Ministry of Human Resources and Social Security.
There were 3,500 respondents to the Nielsen survey from all areas of China. Compared with other countries China ranked fourth in consumer confidence. Indonesia is No. 1. Developed economies ranked weaker.