With incomes rising, China's retail sales surge 13%
Philip Lagerkranser and Tian Ying Bloomberg News Tuesday, September 14, 2004
BEIJING China's retail sales increased 13.1 percent last month, the government said Tuesday, as higher incomes made holidays, cellphones and computers more affordable.
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Sales rose to 426 billion yuan, or $51.5 billion, the National Bureau of Statistics said on its Web site. The gain followed an increase in July of 13.2 percent from a year earlier.
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In the first eight months of the year, the statistics bureau said, retail sales rose 12.9 percent, to 3.37 trillion yuan.
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Increased spending in cities like Beijing and Shanghai is drawing investment from foreign companies. Equally, China is becoming more reliant on consumer spending to drive economic growth as Beijing clamps down on capital investment to help cool inflation.
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"The dependency of China's growth will fall more on consumption," said Joseph Lau, an economist at Credit Suisse First Boston in Hong Kong. "Incomes are still moving up at a reasonable rate."
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Per capita disposable incomes in urban areas, home to a third of the nation's 1.3 billion people, rose 12 percent from a year earlier, to $582 in the first half of this year.
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"Wherever you go there's a lot of people, there's a lot of disposable income, there's a lot of pent-up demand for travel," said Tony Fernandes, chief executive of AirAsia, a low-cost regional carrier based in Malaysia. AirAsia will start flights between Bangkok and the southwestern Chinese city of Kunming in December, he said Monday in Beijing.
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About 2 percent of China's citizens travel internationally, with the number increasing from 15 percent to 20 percent each year, according to Abacus International, Asia's biggest airline ticket sales agent.
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Aeon, Japan's largest retailer, said last week it will open as many as 100 stores in China; the first outlet is expected to begin business this year. Richemont, the world's second-largest maker of luxury goods, said last week that it would increase its outlets in China by a third by 2006 to tap demand for its Cartier watches, Dunhill leather briefcases and Mont Blanc pens.
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Retail sales in towns and cities rose 14 percent last month, to 282 billion yuan, while sales in rural areas gained 11 percent, to 144 billion yuan, the report showed.
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Food sales surged 28 percent, in part reflecting a 14 percent jump in prices. Higher crude prices and rising car ownership lifted sales of oil and oil products by 49 percent, the report said.
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Car ownership in urban areas doubled from a year earlier, to two per 100 households in the first half, the statistics bureau said in July. The average American household owns about two vehicles, U.S. government figures show.
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Still, China's demand for cars is cooling because government curbs have made car loans harder to obtain and consumers are delaying purchases in the expectation that prices will continue falling. Prices of cars and other transport products dropped 13 percent in August from a year earlier, as manufacturers' inventories swelled.
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Beijing Hyundai Motor, the Chinese unit of South Korea's largest carmaker, expected to sell 150,000 units this year and is likely to miss that target, Beijing Star Daily reported Friday, citing the company's deputy general manager, Guo Qian. China Motor, Taiwan's biggest carmaker, said last week that it would miss its 2004 profit target because sales in China were weaker than it had anticipated.
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Morgan Stanley lowered its rating on China's automobile industry on Monday to "cautious" from "in-line," amid concern about rising costs and lower demand.
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China's auto sales increased by 9.8 percent last month from a year earlier, the report Tuesday showed. Sales of telecommunications equipment rose 39 percent, and textile sales gained 25 percent. Furniture sales increased 34 percent, and sales of home appliances climbed 1.3 percent.
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Bloomberg News
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