CHINA / National

Retail sales rose 13.4% on incomes
Updated: 2006-05-15 08:46

China's retail sales probably grew at close to the fastest pace in a year in April as rising incomes left consumers with more to spend.

Sales rose 13.4 percent from a year earlier after gaining 13.5 percent in March, according to the median forecast of 21 economists surveyed by Bloomberg News. The Beijing-based National Bureau of Statistics will release April figures at 10 am local time Monday.

Premier Wen Jiabao has cut taxes and raised minimum wages in a bid to encourage consumer spending and make economic growth less tilted toward investment and exports. Increasing affluence among China's 1.3 billion citizens is luring overseas companies such as Best Buy Co., the largest US electronics retailer.

"China is trying to reduce the pressure on rapid investment growth by increasing consumption," said Tim Condon, an economist at ING Bank in Singapore. "We expect retail sales this year will grow faster" than in 2005.

March's increase was the biggest in a year, adjusting for distortions caused by the weeklong Lunar New Year holiday, which fell in January this year and in February in 2005. Sales growth peaked at 17.8 percent in May 2004, then cooled as the government introduced curbs on lending and investment.

Per capita disposable incomes in towns and cities increased 10.8 percent in the first quarter, while rural incomes jumped 11.5 percent, an April 20 report showed. The economy expanded 10.2 percent in the first quarter, more than any other major economy.

Best Buy on May 12 said it agreed to invest $180 million for majority control of China's Five Star Appliance, giving the U.S. company 136 outlets in eight provinces. Overseas retailers such as Wal-Mart Stores Inc. and Carrefour SA are also expanding their store networks in China.

Increased spending has benefited retailers such as Gome Electrical Appliances Holdings Ltd. Gome, China's largest home-appliance retailer, last week said sales jumped 68 percent in the first quarter.

The following table shows economists' forecasts for percentage changes in China's retail sales in April from a year earlier.