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August 12, 2009

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Domestic demand rules

China's retail sales jumped 15.2 percent last month from a year earlier to 993.7 billion yuan (US$145.5 billion), the National Bureau of Statistics said yesterday.

The increase reflected a still vibrant domestic demand which supported growth in the world's third-largest economy, analysts said.

"Broadly in line with our forecast, the retail sales grew relatively fast in July, countering the continued decline in exports to keep the economy stable," said Li Maoyu, an analyst at Changjiang Securities Co.

The growth in July's retail sales followed increases of 15 percent in June, 15.2 percent in May and 14.8 percent in April.

Consumer expenditure grew 15 percent from a year earlier to 6.86 trillion yuan in the first seven months.

"July's retail sales results provide further confirmation of the strength of domestic demand on the mainland," said Matt Robinson, an economist at Moody's

"The relatively loose monetary policy, government policies to subsidize consumer goods purchases, as well as improving labor market conditions have revived household demand, which helped sustain healthy retail sales growth despite the global economic uncertainty," he said.

The Chinese government has provided incentives since the end of last year to encourage people to buy vehicles and household electric appliances, including television sets, refrigerators and washing machines. The move aims at stimulating consumption when China's exports have been seriously battered by weakened external demand.

The exports tumbled 23 percent on an annual basis to US$105.4 billion last month, extending from a loss of 21.4 percent in June.

Income rises

Meanwhile, the average disposable income for urban residents rose 9.8 percent from a year ago to 8,856 yuan in the first half while it climbed 8.1 percent for rural dwellers to 2,733 yuan.

Last month, automobile sales jumped 32 percent from a year earlier, due to government's incentives for people to buy new cars.

Spending on meat, poultry and eggs rose 6.6 percent and consumption of edible oil climbed 11.9 percent.

The Consumer Price Index, the main gauge of inflation, fell 1.8 percent last month from a year earlier.


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