China: 11% annual increase forecast for retail sales

The forecast growth in retail sales was announced by sources at the Chinese Ministry for Trade.

During the XI Five Year Plan (2006-10), average annual growth is expected to be 11%, which by 2010 should lead to retail sales of 10,000 billion renmimbi, approximately 1,200 billion dollars.

The initial data from the National Bureau of Statistics show a 12.9% increase in retail sales in 2005 and a total value of 6,700 billion renmimbi (about 828.3 billion dollars).

Strong growth in domestic consumption, supported by higher family incomes and more stable prices, is what the Chinese government hopes it will achieve with its policies. China's growth is excessively based on exports, whereas domestic demand is still weak. If there is a falloff in external demand, this situation would expose the country to the risks of over-production, deflation and an increase in outstanding debts.

Therefore, the government plans to redress growth by giving consumption a more important role through tax measures aimed at increasing the amounts spent on education, health and social security, in addition to income tax changes that will increase consumers' available income and buying power. Specifically, starting January 1 this year, the government raised the taxable income threshold from 800 renmimbi (99 US dollars) to 1,600 renmimbi (197 US dollars).

(Source: Ice Shanghai)