Qi Jingmei, a senior economist with the State Information Center, said retail sales of consumer goods in China are likely to grow 10.3 percent to 4.5 trillion yuan (US$544.1 billion) in 2003.

The growth is faster than the estimated 8.8 percent achieved last year, Qi said.

The major driving force behind the growth is Chinese consumers growing tendency to buy high-value items, she said.

"After about 10 years of development, urban residents have begun to shift their consumption focus from small items worth about 10,000 yuan (US$1,204) to larger items valued at 100,000 yuan (US$12,000) or more," Qi said.

Large items such as cars and housing have become increasingly popular in recent years.

An investigation by the State Information Center found that 80 per cent of Beijingers, for example, were not satisfied with their present living conditions and 48 per cent of them said they would buy their own home in the next few years.

A number of new models of cars have been put on the market in the past year, helping to boost consumption.

Developed countries' experience suggests that when a country's per capita gross domestic product (GDP) reaches US$3,000 to US$10,000, the country's car consumption enjoys fast growth.

Per capita GDP stands at US$4,568 in Guangzhou, in South China's Guangdong Province. In Shanghai it is US$4,500 and US$3,000 in Beijing.

This means China's car market has entered a fast development period, she said.

Consumption structures in the vast rural areas will also be upgraded as part of the government's drive to improve living and working conditions there.

Experts say that these areas are lagging behind their urban counterparts by 10 years.

A majority of villages already have access to electricity, said Zhang Xueying, another senior economist with the centre. The government has also been trying to upgrade roads, establish more commercial outlets and supply tapped water to rural areas.

"These efforts will greatly help rural residents gain access to items such as refrigerators, washing machines and colour TVs, in a development similar to that witnessed in urban areas 10 years ago," he said.

Zhang noted that the fast income growth expected this year will directly help the country's consumer goods market.

In the urban areas, the government has already pledged to help laid-off workers and unemployed residents find jobs.

The government will also improve the social security system to help make life easier for urban residents.

The government is also planning to spend more to fight poverty and is also likely to increase public sector workers' wages.

In the rural areas, last year's bumper harvest will help increase farmers' incomes this year.

The government will continue to spread the "fees-for-tax" reform to alleviate farmers' financial burden.

It will also encourage more rural people to work in cities.

Deflationary pressure in China is expected to be eased in 2003, which will benefit the country's consumer goods market.

"The consumer price index is likely to grow 0.5 percent this year, against the 0.8 percent drop during the first 11 months of last year," she said.

Meanwhile, the country's consumer credit is expected to develop further in 2003. "This will certainly stimulate the market."

But both Qi said Zhang admitted that the country's consumer goods market has a number of unfavourable factors, such as a decline in consumer confidence and an imbalance in supply and demand.

(China Daily January 14, 2003)