Growth to weaken

The government economist also warned of the negative effects of the domestic and global economic slowdown on consumer spending, such as job losses and declining incomes.

"A pick-up in sales growth seems unlikely this year, and growth may continue to decelerate," he said, adding that it could take a long time before the government's economic stimulus package began to increase consumer spending.

Peng agreed with that assessment, saying that rising unemployment and slower income growth are likely to further constrain consumption growth in the near future.

China has sought to boost domestic spending to counteract weakening exports. The steps it has taken include two fuel price cuts in a month, cuts in vehicle sales taxes and improving the rural distribution network. It has also offered subsidies for farmers to purchase home appliances.

The government economist said such moves could help boost consumer spending, but it would take time before they were effective. He forecast a turnaround in retail sales growth by 2010.

He urged the government to outline long-term policies that could boost consumption, and he said the government should spend more on medical and social security services to encourage consumer spending.

The NBS said that full-year retail sales in 2008 reached 10.85 trillion yuan (US$1.59 trillion).

Urban sales of consumer goods expanded 22.1 percent to 7.37 trillion yuan, while sales in rural areas increased 20.7 percent to 3.48 trillion yuan, according to the NBS.

In the meantime, annual per capita urban incomes grew 14.5 percent to 15,781 yuan. The figure for rural residents was up 15 percent to 4,761 yuan. In real terms, the growth rate was 8.4 percent for urban residents and 8 percent for rural residents.

(Xinhua News Agency January 22, 2009)