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Retail sales to maintain strong growth
By Qiu Quanlin
Updated: 2007-09-07 06:22
Retail sales on the mainland are predicted to continue the strong
performance in the second half of this year, according to the latest
MasterIndex of Retail released by MasterCard Worldwide.
"Stronger retail sales across the Chinese mainland are projected for the
second half due to continuing rising incomes of both urban and rural
residents as well as strong employment growth," said Yuwa Hedrick-Wong,
economic advisor of MasterCard Worldwide.
According to the recent report, China's retail sales volume is expected
to reach about 4.5 trillion yuan in the second half, with a year-on-year
increase of 12 percent.
China also witnessed a strong retail sales performance in the first half
of this year, with overall retail sales for the January-June period
totaling 4.2 trillion yuan, up 15.4 percent from last year, according to
the National Bureau of Statistics (NBS).
Specifically, urban retail sales for the first half totaled 2.9 trillion
yuan while retail sales at the county level and below rose 14.3 percent
to 1.4 trillion yuan in the period from a year ago, the NBS has said.
Wong also attributed the projected strong growth to the rising growth of
the Chinese economy that bolsters consumer confidence and a booming
catering business, as well as brisk auto and housing sales.
The government has raised salaries for civil servants "by a large margin"
during the last four years and increased subsidies and minimum living
allowances for the poor.
"This (increased salaries and subsidies) will continue to help boost the
consumption market," Wong told China Daily.
The rising grain and food prices and a continuing minimum grain purchase
price scheme would also help increase rural residents' incomes, which, in
return, will push forward retail market development in the county-level
areas and below, Wong said.
"Retail sales are typically affected by two sets of factors, one seasonal
such as the big holidays, and the other structural, such as changes in
real income and employment and consumer optimism. It's no different in
the second half of this year," said Wong.
China is witnessing inflationary pressure in the consumption market but
Wong said it will not affect the overall retail market.
"Inflation in the short term may actually increase sales value. Given
unchanged budget, consumers typically spend the same amount and buy less
in terms of volume. In most cases, however, consumers end up spending
more in order to buy the same amount as previously. As a result, in the
very short term, retail sales would likely go up in nominal terms."
Wong said the only factor in China that is different from the regional
perspective in Asia is the rapid rise in inflationary pressure, which
will entail further government policies to curb the rise.
"Government policies may include a further interest rate increase. So
over the medium term (next 12 to 24 months), even if the real economy
stays strong, retails sales may slow somewhat in growth," Wong said.
(China Daily 09/07/2007 page15)
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