Chinese farmers, encouraged by increased incomes because of rising grain prices, spent much more this year, contributing substantially to the country's hikes of retail sales.

"Farmers' incomes are expected to grow eight percent this year, and so does their willingness to spend," said Zhai Zhihong, director of the Department of Trade and External Economic Relations under the National Bureau of Statistics (NBS).

Official figures indicated that in the first nine months, the per capita spending of Chinese farmers on daily necessities reached 1247.9 yuan (about 150 US dollars), a rise of 11.9 percent year-on-year, far exceeding the 7.4 percent growth for the whole 2003.

China posted the strongest retail sales this year, with the combined retail sales having so far this year exceeded 5 trillion yuan (605.3 billion US dollars), an all-time high in the history.

The Minister of Commerce tipped the aggregate sales in 2004 to rise 13 percent year-on-year to 5.2 trillion yuan (629.5 billion dollars). The inflation-adjusted increase will still reach 9.8 percent, 0.6 percentage points faster than last year.

Zhai attributed the strong growth also to the rising of disposable income of urban dwellers, the surging spending by governments and business as well as to the quickened pace of urbanization.

He said that while daily necessities and food still make up the bulk of the retail sales, the increased sales of cars and communications equipment ,which used to be regarded as luxuries, also help promote the rise of retail sales.

"There is still much room to grow for retail sales in China," Zhai said, pointing to the fact that the disposable income of urban and rural residents are expected to continue to rise in the coming years.

Meanwhile, the efforts by the governments to boost the development of consumption market, including improving consumption policy and environment and expanding consumption "hot spots", will also pay off, he said.

Source: Xinhua