China's retail rise fastest since 1999

A bit of good news continue to support my conviction on domestic consumption willl continue to offset trade weakness in China.

Aug. 13 (Bloomberg) -- China's retail sales expanded at the fastest pace in at least nine years in July as incomes and prices climbed in the world's fastest-growing major economy.

Sales rose 23.3 percent to 862.9 billion yuan ($126 billion) after gaining 23 percent in June, the statistics bureau said today. That was more than the 22.4 percent median estimate of 19 economists surveyed by Bloomberg News.

Urban disposable incomes increased 14.4 percent in the first half, or 6.3 percent after stripping out inflation. China aims to increase consumption to reduce dependence on investment and overseas sales for economic growth.

``Domestic consumption is likely to be the most stable growth engine for the economy for the rest of the year,'' said Michael Dai, senior economist at Bank of China (Hong Kong) Ltd. ``I'd be more worried about the trade sector.''

While economic growth has slowed for four straight quarters, the 10.1 percent expansion in the three months through June was still the fastest of the world's 20 biggest economies. Gross domestic product growth below 9 percent would be ``unacceptable'' for a government targeting 10 million new jobs a year, according to a Credit Suisse Group report this month.