China retail sales grow at fastest pace since 1999
China's retail sales increased at the quickest pace in at least eight years on rising incomes.
By Bloomberg |
HONG KONG: China's retail sales increased at the quickest pace in at least eight years on rising incomes, aiding government efforts to curb the economy’s dependence on exports and investment for growth.
Sales climbed 18.8% to 810.5 billion yuan ($110 billion) in November from a year earlier, the statistics bureau said, after rising 18.1% in October. That was the biggest gain since 1999, according to data.
Stronger domestic consumption may help China weather weaker demand for exports in a global slowdown. The jump in sales also reflects inflation that accelerated to an 11-year high in November, underscoring the risk that the world's fourth-largest economy may overheat.
“There is strong growth in household demand,” said Stephen Green, senior economist at Standard Chartered Bank in Shanghai. “This can help pick up some of the slack as export growth slows next year.”
Sales growth topped the 18 percent median estimate of 21 economists in a survey. Consumer prices rose 6.9% last month.
Household spending accounted for 36% of China’s gross domestic product last year compared with more than 50% in the US, Japan and India.
China’s economic growth is likely to slow to 10.7% in 2008 from 11.4% this year on reduced demand for exports, according to the Organization for Economic Co-operation and Development.
A significant global slowdown may reduce the need for economic tightening in China, “creating a healthier environment that would foster the needed shift toward more sustainable, domestically-driven growth,” said Frank Gong, chief China economist at JPMorgan Chase in Hong Kong.
Sales climbed 18.8% to 810.5 billion yuan ($110 billion) in November from a year earlier, the statistics bureau said, after rising 18.1% in October. That was the biggest gain since 1999, according to data.
Stronger domestic consumption may help China weather weaker demand for exports in a global slowdown. The jump in sales also reflects inflation that accelerated to an 11-year high in November, underscoring the risk that the world's fourth-largest economy may overheat.
“There is strong growth in household demand,” said Stephen Green, senior economist at Standard Chartered Bank in Shanghai. “This can help pick up some of the slack as export growth slows next year.”
Sales growth topped the 18 percent median estimate of 21 economists in a survey. Consumer prices rose 6.9% last month.
Household spending accounted for 36% of China’s gross domestic product last year compared with more than 50% in the US, Japan and India.
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China’s economic growth is likely to slow to 10.7% in 2008 from 11.4% this year on reduced demand for exports, according to the Organization for Economic Co-operation and Development.
A significant global slowdown may reduce the need for economic tightening in China, “creating a healthier environment that would foster the needed shift toward more sustainable, domestically-driven growth,” said Frank Gong, chief China economist at JPMorgan Chase in Hong Kong.
Zhou Xiaochuan, the central bank governor, said that China should focus on boosting domestic consumption. Increased demand for imports would help narrow the trade surplus that is fuelling tension with the US and Europe.
Automobile sales climbed 35%, a boost for companies such as Geely Automobile Holdings, and furniture spending soared almost 60%.
Cosmetics sales rose 33%. Avon Products, the world’s largest door-to-door cosmetics seller, said sales of skin cream and lipstick in China helped to boost third-quarter profit.
For the first 11 months, retail sales rose 16.4 percent from a year earlier to 8.02 trillion yuan, the statistics bureau said. Sales in urban areas jumped 19.2% in November from a year earlier, while rural spending climbed 18%.
A “large part” of this month’s spending growth was due to inflation, said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.
Food and fuel costs are driving consumer-price gains. Spending on meat, poultry and eggs jumped 45% in November from a year earlier. For grains and edible oils, the gain was 48%. Spending on petroleum products climbed 22%.
China has raised minimum wages and reduced a tax on interest income to fatten consumers’ wallets. Disposable incomes among urban households, after adjusting for inflation, rose 13.2% to 10,346 yuan in the first nine months from the same period a year earlier.
Earnings in rural areas climbed 14.8% to 3,321 yuan.
Wal-Mart Stores, the world’s biggest retailer, this week said it had won approval to open its 100th store in the Asian nation.
Automobile sales climbed 35%, a boost for companies such as Geely Automobile Holdings, and furniture spending soared almost 60%.
Cosmetics sales rose 33%. Avon Products, the world’s largest door-to-door cosmetics seller, said sales of skin cream and lipstick in China helped to boost third-quarter profit.
For the first 11 months, retail sales rose 16.4 percent from a year earlier to 8.02 trillion yuan, the statistics bureau said. Sales in urban areas jumped 19.2% in November from a year earlier, while rural spending climbed 18%.
A “large part” of this month’s spending growth was due to inflation, said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.
Food and fuel costs are driving consumer-price gains. Spending on meat, poultry and eggs jumped 45% in November from a year earlier. For grains and edible oils, the gain was 48%. Spending on petroleum products climbed 22%.
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China has raised minimum wages and reduced a tax on interest income to fatten consumers’ wallets. Disposable incomes among urban households, after adjusting for inflation, rose 13.2% to 10,346 yuan in the first nine months from the same period a year earlier.
Earnings in rural areas climbed 14.8% to 3,321 yuan.
Wal-Mart Stores, the world’s biggest retailer, this week said it had won approval to open its 100th store in the Asian nation.
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