Retail sales on the first three days of 2009 rose 13 percent year-on-year, showing the government's efforts to spur domestic demand to prevent an economic slowdown are yielding results.

The country's top 1,000 retailers earned a cumulative revenue of 12.5 billion yuan (US$1.83 billion) on the first three days of the year, according to a Ministry of Commerce survey, released yesterday.

Daily necessities, including food, and clothes, shoes and home appliances sold at a discount recorded good sales, it said. Some cities did exceptionally well. Tianjin saw a dozen of its major retail shops record a 100 percent rise in sales to 200 million yuan.

A ministry official said sales promotions and exhibitions from Jan 1 to 3, which were holidays, boosted consumption across the country. "A good sign is that many exporters have started exploring the domestic market as overseas demand weakens."

Calling the New Year sales "an unexpected harvest", some retailers are looking for a good Spring Festival, the most important holiday in China. The "Golden Week" holiday starts on Jan 26.

"We didn't expect to do so well because people were reluctant to dig into their pockets," said Wang Chunli, general manager of Beijing Caishikou General Merchandise.

But Fan Zhijun, a Beijing-based manager of Suning, expects the sales to keep rising till Spring Festival. Suning is one of the country's largest home appliance retail chains.

"The New Year holiday has seen only 30 percent of the consumers go on a buying spree. Spring Festival will see a lot more," he said.

Experts, too, said the figures were encouraging. "Consumer power is still quite strong. People are willing to spend despite the global financial crisis," said Fan Ying, professor of economics at China Foreign Affairs University.

"Though the rise came after retailers offered big discounts, the figures still look encouraging, given that investments and exports are sluggish."

The robust consumption makes it more likely that the country's economy could pick up steam in the second half of this year.

Companies could use up their inventories amid rising consumption and begin buying to produce more goods in the second half, Yi Gang, deputy governor of the central bank, said earlier. That would take the economy on its normal growth mode.

Total retail sales of consumer goods in 2008 could reach 10.8 trillion yuan, up 21 percent over the previous year, the commerce ministry said in a report late last month.

The country is trying to shift its focus to domestic consumption because its two traditional engines of growth, investments and exports, have slowed down. Exports slid 2.2 percent year-on-year in November, the first monthly decline since June 2001.

In fresh evidence of declining exports, the Purchase Managers' Index, a gauge of business activity in the manufacturing sector, was 41.2 percent in December, the third consecutive month below the 50 mark that indicates shrinking activity. But the index was higher from last month's record low of 38.8 percent.

(China Daily January 5, 2009)