Retail sales in China are touching new highs, reaching US$ 111.2 Billion in October 2007. Booming stocks, rising incomes and supportive government policies have made it possible.

Chinese retail sales exploded by 18.1% year after year to reach Yuan 826.3 Billion (US$ 111.2 Billion) in October 2007, a rise from 17% recorded in September 2007, according to the National Bureau of Statistics (NBS), as per the news published by Xinhua.

The Xinhua news agency reported that rising incomes supported the retail sales growth and consumer inflation bounced back to 6.5%, leveling the monthly record of 11-year. The statistics bureau record tells that spending in towns and cities hopped to 18.6% in October 2007 against the corresponding month last year, while rural sales shot-up to 17.1%. Consumer demand too is steadily rising keeping with booming stock prices and government policies to foster incomes.

China has inflated welfare payments and brought down interest income tax to surge purchasing power of consumers. This draws consumers towards the housing market. House sales have been boosted by reduced interest rates which helped in pushing ahead the overall retail industry.

Besides, the Chinese domestic consumption has remained in doubts for a long time. But the upsurge in China's retail sales is indicative of efforts to lower dependence on exports by strengthening domestic consumption. China is making all efforts to reduce dependence on exports and capital investment and switch to an alternative method by encouraging its people to spend more on consumer goods and travel.

The People’s Bank of China is contemplating further monetary tightening after seeing the robust growth in the Chinese retail sector. According to the bank, this move will not affect the consumers much since the total earnings of the local people are steadily increasing.

According to a Senior Research Analyst at RNCOS, “China’s efforts to push the consumer spending has helped in raising the retail sales too. The future is also expected to see enhanced spending by consumers as the government has come out with several strategies helping the end user. And as China is the most populous country around the world, it will help atleast the food retailers to have busy times ahead. Also, as the inflation is said to be playing a key role in further augment in retail sales”.

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