China's Retail Sales Grow at Fastest Pace Since 2004 (Update1)
By Nipa Piboontanasawat
Sept. 12 (Bloomberg) -- China's retail sales grew at the fastest pace in more
than three years as rising incomes boosted consumer spending in the world's
fastest-growing major economy.
Sales climbed 17.1 percent to 711.7 billion yuan ($95 billion) in August
after gaining 16.4 percent in July, the statistics bureau said today. That beat
the 16.5 percent median estimate of 23 economists surveyed by Bloomberg News.
None predicted such a big gain.
China is trying to boost consumption to reduce its reliance on exports and
investment for economic growth and help shield the nation from slumps abroad.
Decade-high inflation swelled the value of sales in August, while wage and
stock-market gains underpinned demand.
``Even with inflation, there is no question that consumer spending in China
is growing steadily,'' said Arthur Kroeber, head of research at Dragonomics
Advisory Services Ltd. in Beijing. ``But changing the economic structure is
something that will take a number of years.''
The gain was the biggest since May 2004 after adjusting for distortions
caused by China's Lunar New Year holidays. Sales growth has accelerated for
five straight months.
Disposable incomes among urban households jumped 14.2 percent in the first
half from a year earlier and rural earnings climbed 13.3 percent. The benchmark
CSI 300 Index has surged 150 percent this year.
Jewelry, Cars
Sales of meat, poultry and eggs jumped 45.2 percent in August from a year
earlier. Jewelry sales soared 53.3 percent and automobile spending rose 42.3
percent.
For the first eight months, retail sales gained 15.7 percent from a year
earlier to 5.6 trillion yuan. The figures aren't inflation-adjusted. Consumer
prices rose 6.5 percent in August, the fastest pace since December 1996, on
food costs.
China Huiyuan Juice Group Ltd., the country's biggest maker of the beverage,
said profit tripled in the first half. Belle International Holdings Ltd.,
China's largest retailer of women's shoes, said earnings doubled.
Growing demand for clothes, cars and electronics adds to inflation concerns.
The central bank, trying to prevent price increases spreading beyond food, last
week ordered lenders to set aside bigger reserves for the seventh time this
year. It has raised interest rates four times.
Curb on Spending
Wages in Chinese cities and towns almost doubled in the past five years.
Still, the absence of comprehensive welfare prevents some people spending more.
Huang Hongdie, a 21-year-old waitress in the southern town of Shenwan, said
she earns about 1,300 yuan ($173) a month, spends a third on clothes and food
and sends the rest home to her parents in Guangxi.
``I only spend on what is necessary,'' said Huang. ``My parents are old and I
have to take care of them.''
China's economy, the world's fourth-largest, expanded 11.9 percent in the
second quarter, the fastest pace since 1994, as the trade surplus set records.
The nation is vulnerable to falling demand from overseas.
``The rising probability of a U.S. recession and growing trade protectionism
means China's export growth is at serious risk,'' Huang Yiping, chief Asia
economist at Citigroup Inc. in Hong Kong, said in an Aug. 30 report to clients.
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