China's retail sales in July rose 9.8 percent year-on-year, the fastest pace in six months, the National Bureau of Statistics said yesterday.

In June retail sales rose 8.3 percent from a year earlier, rebounding from a 4.3 percent growth rate in May, the slowest in five years.

The growth was 7.7 percent in April, 9.3 percent in March and 9.2 percent for the first two months.

In July, retail sales stood at 356.2 billion yuan (US$42.9 billion), the bureau said in a statement.

Year-on-year retail sales in urban areas rose 11.6 percent to 233.8 billion yuan (US$28.2 billion), while the figure in rural areas increased by 6.5 percent to 122.4 billion yuan (US$14.7 billion).

The strong performance of retail sales suggests that consumer purchasing power, which was held back by the SARS (severe acute respiratory syndrome) outbreak, rebounded in July, said Zhang Liqun, a senior researcher with the State Council's Development Research Centre.

In July, automobile sales jumped 85.3 percent from a year earlier while telecommunications equipment sales rose 57.1 percent.

Sales of furniture were up 31.3 percent, while materials used in construction and decoration jumped more than 72.3 percent.

The heatwave that hit southern China this summer spurred buying of fans and air conditioners, also helping overall sales, the bureau said.

Qi Jingmei, a senior economist with the State Information Centre, predicted the country's retail sales will increase by between 8.3 and 8.5 percent in 2003, down from the 10.2 percent growth predicted earlier.

"The SARS outbreak had a considerable impact on people's consumption capability, especially on farmers' consumption," Qi said.

In the second quarter, when the SARS epidemic was at its most severe, farmers' per capita income dropped by 35 yuan (US$4.2).

It was because many farmers working in urban areas got back to their rural homes where they had no income, experts say.

This would affect farmers' income growth by 1 percentage point for the whole year, said Yao Jingyuan, chief economist with the National Bureau of Statistics. "Since mid-April the country's consumer goods market witnessed big fluctuations," he said.

Retail sales declined quickly and dipped to the lowest level in May. Retail sales in the catering industry dropped a year-on-year 15.5 percent in May. But in June, when the SARS outbreak was brought under control, consumers resumed purchasing.

(China Daily August 15, 2003)