Retail surge in China

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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