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Retail sales set to surge

By Ding Qingfen (China Daily)
Updated: 2009-12-02 07:50

Retail sales set to surge

Encouraged by the central government's stimulus measures tailored for domestic consumption, China's retail sales this year may surge by 16 percent from a year earlier, compared with that of 15 percent during the first 10 months, the Ministry of Commerce (MOFCOM) said yesterday.

The growth will be sustained in the year ahead as relevant new preferential policies are expected to come into effect, the ministry said.

"Benefiting from the series of measures initiated by the Chinese government, retail sales have registered robust growth this year. It is predicted that the figure will increase by 15.6 percent to 12 trillion yuan in 2009," said Wang Bingnan, director general of the Department of Market Operation Regulation under MOFCOM.

Amid the rapid double-digit decline in China's exports late last year, the State Council released a guideline on invigorating domestic consumption to help the Chinese economy. Under the guideline, 32 cities and regions nationwide allocated funds worth 2.5 billion yuan ($366 million) to expand sales networks in rural areas, rebate programs for household appliances and automobiles, and launch credit subsidy policies for small and medium-sized enterprises.

"Ballooning consumption of household appliances, auto, property and agricultural goods is the major driving force behind the rising retail sales," said Chang Xiaocun, director general of the Department of Market System Development.

By the end of October, the rebate program on household appliances has generated sales of 120 billion yuan, and the renewal programs for autos and household appliances have created consumption worth 10 billion yuan, MOFCOM said.

"There is great potential for the auto industry to expand, and there is a high possibility that the existing stimulus measures continue," Chang said.

This year, China surpassed the United States to become the world's largest auto manufacturer and consumer, with sales volume of autos expected to hit 1.3 million by year end.

The government's efforts on stimulating domestic consumption began to take off in the second quarter and gained momentum in the third. "The rural areas outperformed the urban when speaking of growth," said MOFCOM officials.

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China's total retail sales in the first 10 months of this year grew by 15.3 percent year-on-year, figures from the National Bureau of Statistics showed.

As the financial crisis continues and the global exports situation remains grim, China is betting more than ever on domestic consumption. During a recent meeting of the Political Bureau of the Communist Party of China, the government emphasized the significance of sustainable growth in domestic consumption, claiming to promote especially the residents' consumption.

The rising domestic consumption is a key to getting rid of the problem of overcapacity that challenges China as a result of massive construction in the past year, said a recent report by the European Chamber of Commerce in China.

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