Christmas Comes Early For The Booming China Economy

Christmas Cheer Comes Early for China

About: (China Economy, Chinese Economy, China Stock Digest)

No economic indicator is watched more closely than retail sales figures in the United States as the Christmas season approaches. So far the mood in this country is nervous.

China is also keeping a close eye on retail sales as a key economic measure, even though only a small minority of the country’s 1.3 billion people celebrate Christmas. Nevertheless, the retail picture there is exceptionally encouraging.

Large retailers in China say they enjoyed a major surge in sales last month, thanks in part to continuing high demand for new cars and trucks. The Ministry of Industry and Information Technology tracked the performance of 50 big retailers and found their sales jumped 28.4 percent from a year earlier to $2.54 billion in November.

Accelerating retail sales are especially important to the Chinese economy. With exports to western nations still in decline due to the global financial crisis, China is relying increasingly in internal consumption to sustain demand for its products.

China’s major holiday season, the National Day holiday, has already passed. Families celebrated throughout the country in October, and during that festive season, retail sales expanded even more quickly than they did last month, jumping by a record-breaking 35.71 percent. Some of the credit for that sales boom has been attributed to holiday discounting.

The Chinese government reports that sales of automobiles soared 97.3 percent in November while food sales increased 36.3 percent. China’s total retail sales in November grew by 15 percent from a year earlier to $165 billion. That’s off about one percentage point from the month before, due to October’s National Day spending spree.

Increased consumption in China is also good news for the U.S. as it tries to level out its balance of payments deficits.

In order to boost domestic consumption China has extended its stimulus package through tax cuts and rebates. Indications from Beijing suggest that the country will continue to offer subsidies to buyers of efficient cars, and to encourage consumers to trade in their home appliances.

By all appearances, China is succeeding in its drive to wean itself from heavy dependence on U.S. consumers, by boosting the spending of its own population.