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BIZCHINA / Center

Retail sales to soar 15.8% to US$1.17 trln

By Rong Xiandong (chinadaily.com.cn)
Updated: 2007-07-11 17:18

Retail sales of consumer goods in China are expected to jump by 15.8
percent in 2007, the fastest growth in a decade, boosted by huge demand
for large items like houses and cars, according to research by the
country's top planning agency.

The National Development and Reform Commission's State Information Center
predicted that booming retail sales in the first five months of this year
will continue through the rest of the year and may hit 8.85 trillion yuan
(US$1.17 trillion).

The growth rate is 0.6 percentage points higher than the figure for the
period from January to May 2006 and 2.1 percentage points higher than the
overall rate of 2006.

If the price factor is deducted, the actual growth rate is about 12.8
percent, 0.2 percentage points higher than the 2006 level, according to
the research report.

Retail sales in urban areas are expected to rise by 16.2 percent to 5.99
trillion yuan, a growth rate 0.4 percentage points higher than that of
the first five months and 1.9 percentage points higher than the 2006
figure.

The gap in consumption between urban and rural areas is expected to
decline in 2007, the center also noted. In the first five months of the
year, the gap between the consumption growth rates in cities and the
countryside was 1.3 percentage points, compared with two percentage
points in the same period of 2006.

Six factors will continue to give a strong boost to consumption in the
second half of the year, according to experts.

First, the government will continue encouraging the public to buy goods
that stimulate economic growth in the long term.

Second, major products like houses and cars will continue to contribute
to expanded consumption. Car sales continue to boom although the growth
has slowed to some extent due to the vehicle and vessel tax hike,
expectation of the fuel tax, and the bull run in the stock market. From
January to May, car sales rose by 34.2 percent, ranking fourth in terms
of growth rate among various commodities.

In the first five months, the investment in and price of houses in 70
cities nationwide climbed by 27.5 and 6.4 percent year on year
respectively due to high demand.

(For more biz stories, please visit Industry Updates)

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