CHINA’S retail sales will expand by around 14 percent this year, picking up a touch from the 13.7 percent pace seen in 2006, the Commerce Ministry said in a report published yesterday.

The International Business Daily quoted a report by the ministry’s market operations department and its think tank, the Chinese Academy of International Trade and Economic Cooperation, as saying that retail sales would hit 8.7 trillion yuan (US$1.1 trillion) this year, implying growth of 13.9 percent.

“The overall scale of the flow of goods remains in a period of rapid growth,” the ministry-run paper cited the report as saying.

The government is looking to stoke domestic consumption, especially household spending, in an effort to rebalance its economy away from an overreliance on exports and investment.

The report noted a number of obstacles to achieving that aim, including the fact that consumption continued to grow more slowly than investment and exports. It also cited a lack of credit financing and of trained retail professionals as problems that would remain in the foreseeable future.

Separately, the International Monetary Fund’s top Asia expert said Tuesday that China must rebalance its growth by encouraging consumption and decreasing dependency on investment inflows and exports.

“Investment (in China) has grown rapidly, but savings, especially in the corporate sector, have grown even faster,” IMF Asia Director David Burton said in a speech to the Singapore Press Club.

“The need in China, therefore, is to reduce reliance on rapid investment growth, as well as net exports, and to encourage consumption,” he said.

Burton said China could do that by directing government funds toward social spending and by stepping up reforms in the financial and corporate sectors.

Similarly, China should ease its exchange rate controls, allowing it to better use monetary policy for constraining rapid credit growth and excessive investment, he said.

Burton also urged other Asian nations to tackle their own capital inflows surges, which could overvalue their currencies and create asset price bubbles.

Burton’s remarks come 10 years after the start of the Asian financial crisis, which saw a meltdown of the regional currencies.

(SD-Agencies)