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July 17, 2009

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China's retail sales continue to rise

CHINA'S retail sales continued to sustain a healthy expansion last month, strengthening the foundation for a recovery in the world's third-largest economy, the National Bureau of Statistics said yesterday.

The retail sales grew 15 percent last month from a year earlier, compared with increases of 15.2 percent in May and 14.8 percent in April, to 994.1 billion yuan (US$145.5 billion), thanks to government policies to boost spending and people's rising income.

The retail sales in the first half this year totaled 5.87 trillion yuan, up 15 percent from a year earlier.

"Retail sales continue to grow as spending by Chinese households has held up relatively well," said Alaistair Chan, an economist at Moody's

"Strong government investment and bank lending are helping to boost employment and confidence."

The government has provided incentives since the end of last year to encourage people to buy vehicles and household electric appliances. The move was aimed at stimulating domestic consumption when China's exports were seriously battered by weakened external demand.

"The stimulus measures seem to be effective to shore up people's demand," said Hu Yuexiao, an analyst at Shanghai Securities Co.

"Also, the government is relatively successful in stabilizing the job market, which makes people feel safe about spending more."

In the first six months, the sales of automobiles accelerated 18.1 percent from a year earlier while furniture sales gained 28.3 percent. The spending in the hospitality industry also rose 18.1 percent through last month, said Li Xiaochao, a statistics bureau spokesman.

"The expanding domestic demand has become a major driver for China's economic growth," Li said.

Chan also noted a recovery in the industrial sector has provided citizens with a sense that the economy was on the right track to growth.

China's industrial production grew 10.7 percent on an annual basis last month, accelerating from the gains of 8.9 percent in May and 7.3 percent in April. The country's gross domestic product expanded 7.9 percent in the second quarter.


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