Chinese urbanization to boost consumption

Retail sales in January and February have worried the market, but experts are optimistic about the overall situation in future months, highlighting Chinese domestic consumption driven by urbanization.

Growth in China's retail sales slowed to 11.8 percent, or 4.23 trillion yuan (690 billion U.S. dollars), year on year in the two months, the National Bureau of Statistics said.

The weak start does not mean that the whole year will follow suit, said Zhao Ping, deputy director of the Consumption Economy Research Department of Chinese Academy of International Trade and Economic Cooperation.

In 2013, the consumption growth reported the slowest speed in the first two months, but then kept climbing upward till the year end.

Zhao noted that the consumption potential trigged by urbanization is worthy of close attention.

"Expansion on consumption brought by urbanization may not account for a large proportion, but the increment will be substantial,"said Zhao, predicting that household spending coming along with urbanization would be a hotspot for consumer market.

As more rural Chinese settle in cities and towns, retail sales of consumer goods will grow, leading to a sales boom of building materials, furniture, home appliances, food and beverages, and mobile handsets.

Meanwhile, rural Chinese are optimistic on income growth, according a survey by China International Capital Corporation (CICC), the country's largest investment bank. Spending on houses, cars and tourism are the top three consumption desires for the respondents of the survey.

According to the government report delivered by Premier Li keqiang during the recently closed important sessions, China will will "focus on three tasks, each concerning 100 million people: granting urban residency to around 100 million rural people who have moved to cities, rebuilding rundown city areas and villages inside cities where around 100 million people live, and guiding the urbanization of around 100 million rural residents of the central and western regions in cities there."

Just on Sunday, China unveiled an urbanization plan for the 2014-2020 period, saying that "domestic demand is the fundamental impetus for China's development, and the greatest potential for expanding domestic demand lies in urbanization."