Retail sales expansion slows on falling domestic demand
By Wang Yanlin |
August 12, 2010, Thursday
|
Print Edition
Print Edition
CHINA'S retail sales growth moderated again in July, raising concerns of shrinking domestic demand which is supposed to be the major driver of economic expansion.
Retail sales expanded 17.9 percent from a year earlier to 1.2 trillion yuan (US$177 billion) last month, the National Bureau of Statistics said yesterday. The rate was slower than the increase of 18.3 percent in June and 18.7 percent in May.
"The weaker-than-expected sales growth is coupled with disappointing investment and industrial production expansion," said Sun Chi, a Nomura economist. "We believe that the drop in economic activity in July is likely to have been, in part, caused by exceptionally severe flooding in many parts of the country."
A report by Moody's Economy.com said the cooling housing market may be another cause for the moderation.
"If property prices were to crash, there would be a major impact on household wealth which would in turn weigh on retail sales," the report said.
China has taken many measures since 2008 to boost domestic demand after exports nosedived due to the global financial crisis. Sales of household appliances and big-ticket items, such as vehicles, have seen a huge jump after the country offered subsidies in the "old-for-new" program to encourage consumption.
But after nearly two years, the effect of such measures is fading after many people traded their old products for new, the report said.
It, however, ruled out a sharp reduction in retail sales in the coming months.
"Rising employment in the manufacturing and services sectors, together with rising incomes, have helped to sustain above-trend sales growth this year, despite the scaling back of stimulus measures and tightening credit standards weighing on sales over recent months."
Retail sales expanded 17.9 percent from a year earlier to 1.2 trillion yuan (US$177 billion) last month, the National Bureau of Statistics said yesterday. The rate was slower than the increase of 18.3 percent in June and 18.7 percent in May.
"The weaker-than-expected sales growth is coupled with disappointing investment and industrial production expansion," said Sun Chi, a Nomura economist. "We believe that the drop in economic activity in July is likely to have been, in part, caused by exceptionally severe flooding in many parts of the country."
A report by Moody's Economy.com said the cooling housing market may be another cause for the moderation.
"If property prices were to crash, there would be a major impact on household wealth which would in turn weigh on retail sales," the report said.
China has taken many measures since 2008 to boost domestic demand after exports nosedived due to the global financial crisis. Sales of household appliances and big-ticket items, such as vehicles, have seen a huge jump after the country offered subsidies in the "old-for-new" program to encourage consumption.
But after nearly two years, the effect of such measures is fading after many people traded their old products for new, the report said.
It, however, ruled out a sharp reduction in retail sales in the coming months.
"Rising employment in the manufacturing and services sectors, together with rising incomes, have helped to sustain above-trend sales growth this year, despite the scaling back of stimulus measures and tightening credit standards weighing on sales over recent months."
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