Retail surge in China
Thursday, 13 March 2008
Marko Barosevic
Buoyant consumer spending in China has added another string to the country’s economic miracle. Retail sales in February and January grew by 20.2% on a year earlier. The increase was the fastest acceleration in retail sales since monthly statistics were compiled in 1999.
The data does have a dark cloud. The boost in nominal sales was aided by rising inflation that hit a 12 year high of 8.7% last month. Food prices have taken off, particularly staples such as pork. In real terms the growth is a more modest 12% to 13% as reported in this morning’s Australian Financial Review.
The specter of inflation has rattled Chinese officials as consumer spending and a wave of foreign investment push the economy to its limits.
Nonetheless foreign companies are still jumping head first into the country. A China of rising incomes and evolving tastes is the great retail prize.
A TEC survey of Australian chief executives released today highlights the growing economic importance of China in Australia. It shows 57% of chief executives have some business with the country, a jump from 51% last quarter. This figure rises to 73% for manufacturing companies.
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