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Efforts to encourage consumers paying off
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China's retail sales are reaching new heights while the market remains relatively stable, a National Bureau of Statistics (NBS) report said.


This is a result of the country's efforts to push up consumption, said the NBS report, which was published yesterday on the bureau's website.


The variety of commodities on the market has increased and their quality improved because of these efforts, the report said.


Consumers have more choices, especially in the fields of IT products, cars, home improvement items and household electrical appliances.


According to a Ministry of Commerce survey, the proportion of commodities whose supply roughly balances demand has risen from 12 percent in 2002 to 28.7 percent last year. That of oversupplied products dropped from 88 percent four years ago to 71.3 percent in 2006, the report said. There's no product whose supply can't meet demand.


This scenario has led to a buyer's market, the bureau said.


The scale of China's retail sales has expanded quickly, with an average annual growth rate of 12.2 percent in 2003-06.


In rural areas, the report said, the authorities have initiated policies to support farming, which increased farmers' income and rural consumption.


The rural market's contribution to the overall retail sales growth has risen from 21.3 percent in 2002 to 30.2 percent in 2006. The gap in retail sales between rural and urban areas in terms of year-on-year growth narrowed from 7.7 percentage points in 2002 to 1.7 percentage points in 2006.


Some products and services have become popular, such as cars, houses, telecommunication goods and travel.


From 2003 to 2006, vehicles has registered the fastest annual growth rate - 52.3 percent - in major wholesale and retail enterprises, with communication equipment taking the second place with an average annual growth of 50.4 percent.


Wholesale and retail sectors have grown rapid during the period, the report said.


Another new trend is that big sales enterprises have dominated the market. In 2006, the total sales of wholesale enterprises with annual sales of over 20 million yuan and retail enterprises with annual sales of over 5 million yuan accounted for 55.8 percent of sales by all type of enterprises, 6.5 percentage points higher than in 2002.


The catering trade is a new growth point for China's retail sales, the report said. This has been made possible as people's living standards continue to rise and they increasingly opt to dine out. Another factor is booming business activities and the expanded domestic travel market.


In 2006, sales of accommodation and catering businesses increased by 16.4 percent year-on-year and accounted for 13.5 percent of overall retail sales, 2 percentage points higher than in 2002.


Circulation regime reform


Since 2003, authorities have strengthened the commodity circulation system's reform, which has provided a boost to the expansion of the retail sales.


Many new forms of sales, such as franchised stores and shopping malls, which used to be rare, have developed fast, the report said. Franchised stores and shopping malls have now become major players in the market.


Circulation in rural areas has been a focus of policymakers. The Ministry of Commerce has been initiating a program to build a number of major local markets since 2005 to satisfy increasing local demand.


Such efforts have improved circulation network in rural areas, which have traditionally lacked such service links. Some 120,000 local stores have been established so far, benefiting 140 million farmers and leading to an increase of 40 billion yuan in rural consumption, the NBS said.


Many commodities markets have been expanded in the past four years and have become major places for transaction and information sharing.


By the end of 2006, there were 743 markets nationwide with a total turnover of over 1 billion yuan, almost triple that in 2002.


The report said the regulatory role of the government has had a great bearing on the stable growth of retail sales. Thanks to effective and timely government measures, the market has weathered the impact of SARS (severe acute respiratory syndrome), bird flu, mad cow disease and foot and mouth disease since 2003 and have not led to serious or long-term damages to market stability.


In 2003-06, the gap between highest and lowest retail sales growth was only 4.6 percentage points and the monthly growth gap was within 1 percent.


The report attributed the favorable trend in the consumption market to sound macroeconomic growth and the pro-consumption policies of the country.


(China Daily September 25, 2007)


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