China’s retail sales grow faster in both rural and urban China during May 2007, leading to a steady growth in the country's economy.
Retail sales in both rural and urban China have been on a steady increase rising to record levels, which is an important indicator of China’s economy on the whole.
The National Bureau of Statistics (NBS) on Wednesday, June 13, 2007, reported a 15.9% rise in China’s retail sales during this May (2007) from the previous year. People's Daily Online published news of the NBS revealing that retail sales, key indicator of customers’ spending rose to 715.8 Billion Yuan during May 2007, marking a 6.9 hike from April 2007’s 667.3 billion Yuan.
For the urban areas, the rise in retail sales was 16.3% to 486.2 Billion Yuan and in the rural scenario there was a 15% hike to 229.6 Billion Yuan. In retail and wholesale sector a 15.7% jump was registered, whereas the catering and hotel industry grew by 18.7%.
Rising prices, rapidly rising incomes & wealth resulting from a record stock-market rally fuelled a 3-year rise in retail sales growth in China in May 2007. Also helping sales was an increase in inflation in April 2007 hitting a 27-month high owing to rise of meat prices. However the opinion of economists was that the report was a confirmation of a well-established trend of increasing expenditure and evidence of the government achieving a certain degree of success in weaning the economy off its reliance on investment and exports.
Together with accelerated urbanization, increase in incomes is the primary reason for consumption being underpinned. In real terms there was a 16.6% increase in disposable incomes (DI) in towns from the previous year in the 1Q. Rural incomes rose a real 12.1%. However a steady increase in spending on education and health, and efforts to expand pension coverage to ensure that people become wealthier are being made by the government.
In the opinion of a RNCOS research analyst, retail sales - a vital sign of China’s market move and the consumers’ behavior – have been showing an accelerated growth in the past years. The expectation for retail sales is a 15% increase in 2007, in contrast to 13.7% rise in 2006 and comfortably in excess of the 12.8% rise in 2005. This hike in consumer demand has favorable implications for companies catering to the growing middle class in China and is likely to ensure another year of record profits for such companies.
Related Market Research Reports:
China Retail Sector Analysis (2006-2007)
Opportunities in Retail Sector - China (2007-2011)
Vietnam Retail Industry Analysis
