Research - OCTOBER 16, 2014

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China’s retail sector continues rapid expansion, outlook ‘cautiously optimistic’

by Reg Clodfelter

On the back of 7.7 percent year-over-year growth in China’s GDP during the first half of 2014, retail sales increased an impressive 12.1 percent year-over-year to $2.02 trillion over the same period, and China is now expected to overtake the United States as the world’s largest retail market by 2016, according to Knight Frank and the Economist Intelligence Unit.

The growth in GDP and retail sales was accompanied by a 9.6 percent year-over-year increase in the disposable income of urban households, and the positive indicators, along with Chinese policymakers’ clear goal of boosting domestic consumption, have led Knight Frank to give the Chinese retail sector a “cautiously optimistic” outlook in the firm’s newest Market Watch report on the sector.

The caution likely stems from the prevailing hang-ups among investors worldwide concerning both Chinese and retail investment. Chinese economic growth, while still setting a

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