Chinese Retail Sales rose 21.6% in 2008

Chinese retail sales rose by 21.6% in 2008, mainly due to the increased domestic demand, induced by various initiatives taken by the Chinese government.

The National Bureau of Statistics (NBS) stated that China’s retail sales escalated 21.6% to reach 10.849 Trillion Yuan in 2008. In 2007, retail sales increased by 16.8% to 8.92 Trillion Yuan, as reported by Forbes.

In 2008, growth rate (for entire 2008) was 4.8% higher from 2007. Meanwhile, urban retail sales registered an increment of 22.1% to 7.374 Trillion Yuan whereas rural retail sales surged to 3.475 Trillion Yuan, up 20.7%. There was an increase of 21.5% in the collective sales for retail and wholesale sectors. Catering sector observed a 24.7% rise in sales. The inflation-adjusted retail sales grew by 17.4% in the last month of 2008, 0.8% higher than November sales.

The positive growth in Chinese retail sales is largely credited to higher domestic demand. The increase in demand was a result of several measures taken by the government, including reduction in vehicle sales tax and fuel prices as well as improvement in rural distribution network. Farmers were offered subsidies to make the purchase of home appliances convenient for them.

The government also took measures to increase the rural income. All these efforts increased the consumption strongly in urban as well as rural areas of China. Higher industrial output and a strong bounce-back in money supply were the other factors that propelled the sales.

However, during the later half of 2008, retail sales grew sluggishly due to the economic recession. Easing inflation and weak consumer confidence made the retail sales to suffer YOY decline from 23.3% in July 2008 to 20.8% in November and then to 19% in December last year.

The global economic recession will continue to impact consumer expenditure negatively. As there are low chances of retail sales to recover this year, growth will continue to decline. Also, it will take a long time before the government’s economic stimulus package starts boosting the consumer spending.

According to a Research Analyst at RNCOS, “Sluggish economic growth and increasing unemployment are expected to restrain consumption in times ahead. It is required that China should frame long-term policies to encourage consumption.”

Related Market Research Reports:
U.S. Convenience Stores Market Outlook to 2013
China Apparel Industry - New Opportunities for Growth
Russian Food and Non Food Retail Forecast (2009-2012)