INCOMES in China have increased sharply and living conditions improved, according to the official Market News newspaper. Last year, the average annual income of urban residents was 2,337 yuan (HK$2,117), 8.4 times the figure for 1978. The average annual income for rural residents rose to 922 yuan, an increase of 52.6 yuan compared with 1978. In the past year, residents of rural areas spent an average of 685 yuan on consumer goods, 6.2 times the 1978 figure, while urban residents spent an average of 2,111 yuan on such goods, 6.5 times the 1978 figure. The money spent on durable consumer goods, clothes, leisure pursuits and foodstuffs showed sharp increases on the previous year, the newspaper said. Living conditions also saw a considerable improvement. For instance, last year, the average living-floor space for urban residents was 7.7 square metres, an increase of 0.1 square metre compared with the previous year. In the first quarter of this year, retail sales of consumer goods reached 281.2 billion yuan, up 17.5 per cent on the same period last year. The volume of group consumption for the period stood at 30.5 billion yuan, an increase of 27.1 per cent compared with the 1993 figure. The average annual income of urban residents is expected to reach 2,577 yuan this year, with living expenses expected to take up about 2,263 yuan. The annual average income of rural residents is expected to reach 978 yuan, and their living expenses are predicted to reach 779 yuan. Western economists said the official media had released a series of 'good news' stories in the run-up to the National Day celebrations. In addition to a fireworks display on the night of October 1, a three-hour-long large-scale gala performance will be staged in Tiananmen Square featuring about 100,000 artists and performers. Central Government leaders are expected to watch the performance from the rostrum overlooking the square. But no military parades are planned and Beijing officials said security measures would be beefed up to ensure the safety of participants.