China retail sales increase by 22 percent

It seems as though domestic demand may be enough to keep China out of the recession as retail sales increased by 22 percent, which is its fastest pace for nearly nine years.

According to the Statistics Bureau, during the last month, sales have increased to 1.008 trillion yuan.

The benchmark CSI 300 Index of shares closed 1.2 percent higher and the yuan rose to 6.8285 against the dollar following the announcement.

The increase in retail sales have been supplemented by the good news that the Chinese government has pledged 4 trillion yuan (£374 billion, $586 billion) on infrastructure and developments in order to boost the economy, as the reduction in export demand had threatened the economy.

Arthur Kroeber, head of research at Dragonomics Advisory Services Ltd. in Beijing, said that the stimulus package introduced by the government has been interpreted as a signal to continue shopping.

It is the increase in domestic consumption that has meant that there is no safety net for the Chinese economy.

Within the period the greatest contributors were car and luxury good sales with car sales up 19.6 percent in October and Jewellery up 30.6 percent.

It is not all rapid growth across the board though, as household electronics increased by only 0.8 percent and there was a further sign of potential weakness as there were slower sales across food, clothes, building materials and sporting goods.

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