Analysts believe the commodity market will continue to register
steady growth in the second half of 2004, but that growth will slow
slightly from the first half of the year.
Retail sales of consumer goods are likely to grow 10.5 percent
year-on-year, to 5 trillion yuan (US$602 billion) during the
July-December period, said the Ministry of Commerce.
Sales of industrial products are expected to climb15 percent, to 10
trillion yuan (US$1.2 trillion).
Qi Jingmei, a senior economist with the State Information
Center, said that steady growth in retail sales will be music to
the ears of the central government, which is trying to reduce
investment but lift consumption.
Retail sales were 2.5 trillion yuan (US$304 billion) in the
first half of this year, an increase of 12.8 percent year-on-year.
The growth rate was 4.8 percentage points higher than in the same
period last year.
The catering industry performed especially well, becoming a new
growth area for retail sales.
The commerce ministry said that such issues as the low
consumption rate, slow growth in rural sales and higher inventories
must be addressed in order to sustain development of the nation's
commodity market.
China's average consumption rate stood at 58.5 percent over the
past 10 years, the ministry said.
That rate was 20 percentage points lower than those of developed
countries.
During the first half of this year, retail sales growth hit a
record level last seen in 1997. However, that rate was 22.3
percentage points lower than that for fixed asset investment. As a
result, the consumption rate dropped to 55.4 percent, the lowest
level since 1978.
Figures from the National Bureau of Statistics show that per
capita income earned by both urban and rural residents increased by
a wide margin during the first half of this year. However, the
consumer confidence index dropped.
Car sales slid 5.6 percentage points during the first five
months from the same period a year ago, and sales of commodity
housing declined 3.2 percentage points.
Development of the rural market was also far from satisfactory,
although the government has taken steps to fuel the development of
agricultural and rural areas, according to the Ministry of
Commerce.
Rural retail sales rose 9.1 percent year-on-year during the
first half of this year, but the growth rate was 5.6 percentage
points lower than that in urban areas.
Growing inventories in some sectors are another serious concern.
By the end of May, stocks of automobiles , alumina, steel and
cement had climbed 36 percent, 25 percent, 8 percent, 3 percent,
respectively, compared with a year ago.
The increased costs resulting from higher inventories have led
to a slide in companies' profits, the ministry said.
Weakness in the distribution sector and local government
restrictions may also have a great impact on the development of the
commodity market.
Zhang Junkuo, a senior researcher at the State Council
Development Research Center, said China's overall economic
performance is good at the moment.
"The national economy has maintained stable but fast growth.
Economic efficiency has steadily improved, and individual income
rose noticeably," he said.
Control is being gained over uncertainties and unhealthy factors
in economic performance, although the government must heed the fact
that they have not been fundamentally rooted out.
Energy and transportation bottlenecks and rapid growth in fixed
asset investment in some sectors are still a cause for concern,
said Zhang, but the government should not take further tightening
measures to cool growth because fixed asset investment, money
supply and other indicators have slowed markedly.
Fixed asset investment declined 14.4 percentage points during
the second quarter compared with the first quarter.
Broad money supply, or M2, rose 16.2 percent year-on-year in
June, according to the People's Bank of China. The growth rate was
4.7 percentage points lower than a year earlier, and 1.3 percentage
points down from the previous month.
Outstanding renminbi loans were up 16.3 percent in June. That
growth rate was 6.8 percentage points lower than a year earlier and
down 2.3 percentage points from the end of May.
(China Daily July 30, 2004)