The per capita disposable income of China's urban residents reached 2,639 yuan (US$317.9) during the first quarter, a real growth of 9.8 percent from the same period last year, the National Bureau of Statistics (NBS) said Wednesday.

Researcher Zhang Liqun, of the State Council's Development Research Center, said the increased income was beneficial to the country's consumer goods market, which accounted for about 60 percent of the gross domestic product (GDP).

"With more money in their hands, urban residents will spend more while buying items they want," Zhang said.

During the first quarter, per capita spending by urban residents stood at 1,839 yuan (US$221.6), a real growth of 7.9 percent from a year ago.

Due to the increased spending by both urban and rural residents, China's retail sales grew a year-on-year 10.7 percent to 1,283 billion yuan (US$154.6 billion) during the first quarter.

Zhu Jianfang, an economist at China Securities, said the country's retail sales market has started picking up gradually.

"This trend will continue in the coming months, as people's expectations for the future seem to be optimistic," he said.

A survey by the central People's Bank of China revealed that 26.3 percent of urban residents, who own individual accounts in banks, believe their income will grow this year, while only 8.5 percent of them anticipate their income will fall.

More than 10 percent of urban residents plan to buy private cars in the second quarter, while 21.4 percent of them plan to buy homes.

Rural residents also have confidence for the future, as the central government has pledged to increase their income through various methods, Zhu said.

The country's retail sales figure is likely to grow by 11 percent for this year, he said.

Qi Jingmei, a senior economist with the State Information Center, agreed, adding that improving retail sales can only come gradually.

"Consumption should play a bigger role in driving the country's economic growth this year," she said.

Last year, retail sales grew a year-on-year 9.1 percent and the country's GDP also grew by the same figure.

During the first quarter, China's economy grew by 9.7 percent.

NBS spokesman Zheng Jingping said the overall economic situation was good.

"There are no obvious ups and downs in economic growth," he said.

(China Daily April 29, 2004)