Free Trial

MNI EXCLUSIVE: Chinese Retail Sales To Improve In Q4: Advisors

By Wanxia Lin
     BEIJING (MNI) - Chinese retail sales will pick up in the fourth quarter,
underpinning economic growth following a record low 6% y/y rise in GDP in Q3,
government advisors told MNI.
     The rate of expansion in retail sales may rise to around 8% y/y in the
fourth quarter, from 7.8% in September, helping to stabilise GDP growth at 6% in
the final three months of the year, said Zhang Yiqun, director of the fiscal
studies institute affiliated with the Jilin province finance department. That
would mean annual growth would fall in the target range of 6 - 6.5%, Zhang
added, suggesting that the government further stimulate consumption by boosting
incomes, reducing charges for services such as telephones and internet, and
relaxing restrictions preventing researchers, teachers and health workers from
seeking additional private incomes.
     Liu Xiangdong, deputy director of the economic research department at the
China Center for International Economic Exchanges, saw retail sales growth above
8% y/y and 6.1% or 6.2% GDP growth in Q4, taking the annual increase in GDP to
6.2%, if previously-announced stimulus measures to boost investment take effect.
     Both advisors believe car sales, which have declined for 15 consecutive
months, will bottom out in Q4. A recent relaxation of limits on car purchases
should help, said Liu, while Zhang said that the low base for comparison will
the same period last year will boost the numbers, even if any rebound will
likely be temporary.
     The advisors were divided on the outlook for investment. According to Liu,
property investment will maintain double-digit growth of around 10% y/y until
the end of this year, while infrastructure investment growth will rise somewhat
from the 4.5% recorded from January to September, as newly-started projects ramp
up. But Zhang said investment growth generally peaks in the second and third
     Zhang and Liu agreed that a change to consumption tax earlier this month,
gradually shifting the responsibility for its collection from producers to the
wholesale and retail sectors, should have little effect on consumers.
     Only a relatively small proportion of goods will be affected by the initial
stage of the reform, with the responsibility for collecting taxes on more
expensive items, such as high-grade watches, jewelry and jade, being first to be
transferred, said Liu, adding that he did not expect much effect on prices.
     The reform is aimed at fortifying local government finances and providing
them with incentives to promote consumption, although some provinces, such as
the liquor- and tobacco-producing regions of Guizhou and Yunnan provinces in
western China, may lose revenues as a result. Richer provinces in eastern China
should benefit, the advisors said, calling for the reforms to be enacted at a
measured pace, and to be accompanied by other measures such as increased
transfer payments to the west of the country.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$A$$$,M$Q$$$,MT$$$$,MX$$$$,MGQ$$$]

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.