Retail sales, a key barometer of domestic consumption, amounted to 761.4 billion yuan (US$91.7 billion) during the two months, a year-on-year increase of 9.2 per cent, the bureau reported in a statement.

Retail sales in urban areas rose a year-on-year 10.7 per cent to 49.7 billion yuan (US$6 billion) while those in rural areas increased by 6.6 per cent year-on-year to 26.5 billion yuan (US$3.2 billion), it said.

The booming sales figures were largely the result of increased spending on food and tourism during the Spring Festival holiday (the Chinese Lunar New Year), the bureau said.

A health scare sparked by a recent outbreak of atypical pneumonia in South China's Guangdong Province, also triggered a sharp rise in medical products sales, the report indicated.

"Retail sales have been growing steadily in recent months, propelled by growing numbers of urban residents with increasing incomes buying large items such as cars and homes," said Zhang Liqun, a senior research fellow with the Development Research Center under the State Council.

Sales of automobiles surged by 93.8 per cent year-on-year in January and February, while sales of telecommunications equipment jumped 100 per cent, figures from the statistics bureau revealed.

Qi Jingmei, a senior economist with the State Information Center, said China's consumer goods market would enjoy faster growth this year.

"Retail sales of consumer goods in China are likely to grow 10.3 per cent to 4.5 trillion yuan (US$544.1 billion) for the whole of 2003," she said.

The upgrade of consumption structure is a major driving force for the projected growth, 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$1,200) to larger items valued at 100,000 yuan (US$12,000) or more," Qi said.

An investigation by Qi's center found that 80 per cent of Beijing residents were unhappy with their current living conditions with 48 per cent of them hoping to buy homes in the coming several years.

Consumption structure in the country's vast rural areas, which experts claimed would lag behind urban areas for a decade, will also see an upgrade, the result of the government's efforts to improve living and working conditions in these areas.

A majority of villages now have access to electricity, said Zhang Xueying, another senior economist at the State Information Center.

The government has also been involved in projects to upgrade roads, establish more commercial outlets and supply tapped water to the areas.

These efforts will greatly encourage rural residents to consume household items such as refrigerators, washing machines and color TVs, a similar pattern the country witnessed 10 years ago in its urban areas, he said.

(China Daily March 16, 2003)