Mainland retail sales growth hits record 22pc
Cary Huang in Beijing
Rise in consumption may plug slow exports gap
Retail sales on the mainland powered ahead at a record pace last month, extending an established pattern of strong spending that could cushion a slowdown in exports as the global economic outlook dims.
Retail sales of consumer goods last month rose 22 per cent year on year to 814.2 billion yuan (HK$908.4 billion), the National Bureau of Statistics announced on its website yesterday. The increase was the biggest since 1999, the first time monthly data in that category was collected.
Economists said rising consumer spending, expressed in nominal terms and hence boosted by a lofty inflation rate, suggested that economic growth was tilting away from investment and exports. Consumption, investment and exports are the three engines driving the world's fastest growing major economy.
'It is a welcoming development that suggests that the economy is moving forward to more healthy growth, which sees growing balance among exports, investment and consumption,' said Zhao Xijun, the deputy head of the Research Institute of Finance and Securities at Renmin University.
Urban retail sales rose 22.9 per cent last month to 555.9 billion yuan, while retail sales in rural areas grew 20.1 per cent to 258.3 billion yuan, the statistics bureau statement said.
Professor Zhao pointed out that while inflation and rising costs had contributed to the record sales, the figures also indicated that the rising income of ordinary urban and rural residents as well as government policies to boost consumption had taken effect on consumption.
On a seasonally-adjusted and annualised basis, retail sales growth rose to 21.7 per cent last month from 21.3 per cent in March, Goldman Sachs economists Yu Song and Hong Liang said in a research note.
In real terms, retail sales growth last month rose 13 per cent year on year from 12.7 per cent in March, the US investment bank said.
Goldman Sachs said that with the consumer price index at a decade high, it was not surprising to see nominal retail sales at a decade high as well.
'However, real retail sales growth has been holding up as well,' the investment bank said. 'While real wage income growth has softened in recent months, it remains at a firm level and we expect it to provide support for real consumption.'
On Monday, the statistics bureau said the consumer price index, the main gauge of inflation, rose 8.5 per cent year on year last month from 8.3 per cent in March and a nearly 12-year high of 8.7 per cent in February.
Retail sales of consumer goods in the first four months totalled 3.3697 trillion yuan, up 21 per cent, compared with a growth rate of 20.6 per cent recorded in the first quarter.
Retail sales surged 16.8 per cent last year, the fastest in 11 years.
Retail sales of food and cooking oil rose 36.3 per cent, while those of meat and eggs gained 30.8 per cent, jewellery made from gold or silver were up 41 per cent, vehicles rose 25.7 per cent and crude oil and related refined products gained 45.4 per cent.
The People's Bank of China on Monday raised the reserve requirement for banks by another 50 basis points, to a new high of 16.5 per cent, to be effective on Tuesday.
Since last year, the central bank has raised interest rates six times and the reserve requirement ratio 14 times to curb inflation and prevent economic overheating.