Government spending limits hits rise in retail sales in China

Government spending limits hits rise in retail sales in China

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During the first quarter of 2013, retail sales in China reached 5.55 trillion yuan, which marked a year-on-year growth of 12.4 percent. However, this also marked a decline of 2.4 percent from a year ago, which was partly due to efforts to cut government spending.

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The National Bureau of Statistics said that urban retail sales came to a total of 4.79 trillion yuan, which was up by 12.2 percent year-on-year. On the other hand, rural retail sales grew by 13.9 percent to 755.7 billion yuan. A macroeconomic analyst Tang Jianwei said that high end consumption had affected the government’s anti-graft policies, which might reduce the growth in retail sales of consumer goods this year.

Even the catering industry was severely affected and recorded the lowest growth in a decade. The growth of restaurants fell by 4.8 percent to 589 billion yuan, which was caused due to the government cracking down on wasted public money, due to luxury banquets. Sheng Laiyun, the spokesperson of the National Bureau of Statistics, said that the drop in sales at high end restaurants was a result of curbing consumption. According to Sheng, retail prices were the main cause of the drop in sales, rather than the lack of growth in the catering industry.