China's consumer spending rose last year but not up to
expectation, a top statistician said yesterday.
Retail sales rose 13.7 percent to 7.64 trillion yuan (US$979.6
billion), National Bureau of Statistics (NBS) head Xie Fuzhan said
at a press conference. But as the national economy's growth engine,
domestic consumption needs to be boosted further.
"The domestic consumption market is growing at a brisk pace, and
consumer spending is accelerating." But, Xie said, "as a big
country, China has to base its economic development on domestic
demand".
Last year's retail sales were 0.8 percentage points higher than
2005. In December, sales hit 749.9 billion yuan (US$96.1 billion)
last year, up 14.6 percent year on year.
But despite the robust economic growth, inflation remained
subdued. China's consumer price index (CPI), a major inflation
index, grew 1.5 percent in 2006, 0.3 percentage points less than
the previous year.
The CPI rose to 2.8 percent in December mainly because of rising
food prices. And Xie attributed the recent increase in food prices
to tight domestic supply, inefficient circulation and a fall in
global grain output last year.
"Combined with slowing producer and falling commodity prices,
this implies that overall inflationary risk will remain low this
year," HSBC's chief China economist Qu Hongbing said.
Rocketing automobile sales provide compelling evidence of the
growing appetite of consumers in the country.
China has already overtaken Japan to become the world's second
largest market for new vehicles, registering sales of 7.22 million
units in 2006, up 25.13 percent over the previous year, according
to China Association of Automobile Manufacturers. By the end of
last year, only United States sold more vehicles than China.
The country has taken a lot of steps in recent years to increase
domestic consumption in order to reduce its reliance on investment
and export growth.
But on one hand, an incomplete social security system has
prevented domestic consumers from loosening their purse strings.
And on the other, strong external demand has led to a huge trade
surplus, compared to which the growth of domestic consumption is
still low.
(China Daily January 26, 2007)