Chinese shoppers out in force again in November

BEIJING, Dec 12 (Reuters) Chinese shoppers splurged on cars, jewellery and clothes last month, helping to drive retail sales up 14.1 percent from a year earlier, official data showed on Tuesday.

The rise, though down from 14.3 percent in the year to October, was in line with forecasts and confirmed a well-entrenched trend of strong spending on the back of rising incomes and government efforts to spur household consumption.

''This is the fourth time that the increase in retail sales has come in above 14 percent this year, which is good and shows spending is growing steadily,'' said Ma Qing, an analyst at CITIC Securities in Beijing.

Fresh evidence of strong consumption will be welcome to China's top policy makers as they embark on a strategic economic dialogue with U.S. officials, led by Treasury Secretary Henry Paulson in Beijing on Thursday.

Under political pressure to do something about the record U.S. trade deficit with China, Paulson is likely to encourage Beijing to step up its efforts to wean the country's economy off exports and investment to help narrow the trade gap.

The authorities have been doing just that, by scrapping export tax rebates, raising the minimum wage and pouring money into the countryside that is home to two out of three Chinese.

''Looking forward, we expect retail sales growth to remain strong amid robust employment and income growth, facilitated by the government's strong policy emphasis on promoting private consumption,'' economists at Goldman Sachs told their clients.

But economists say Beijing still has plenty of scope to switch spending from investment in roads and ports to areas such as health and education, which eat up a fat chunk of ordinary people's incomes and force them to save for a rainy day.

''I think the government should spend more, especially in social welfare sectors,'' said Ma at CITIC.

The retail sales statistics give only a partial picture of consumption because they exclude most of the fast-growing services sector.

Most of the categories of goods showed a much bigger leap than the overall 14.1 percent rise.

Sales of discretionary consumer products were especially strong, with car sales up 27.7 percent from a year earlier, furniture 24.3 percent, garments 21.5 percent and jewellery a whopping 39.4 percent.

''Looking ahead, the consumption outlook remains bright, with firm support from steady household income growth. Indeed, both urban and rural income per capita has risen faster than overall real GDP this year,'' said Qian Wang with JPMorgan in Hong Kong.

REUTERS PV RAI1145