China grocery market now world’s biggest

China has overtaken the US as the world's biggest food and grocery retail market, a report said Wednesday, indicating the country's robust purchasing power for basic consumer goods amid a global slowdown.

The Chinese grocery sector was worth 607 billion pounds ($964 billion) in 2011, while the US market came in at 572 billion pounds last year, said a report released Wednesday by the Institute of Grocery Distribution (IGD), a British grocery consultancy.

The grocery market in China is forecast to be worth 918 billion pounds by 2015, the report said.

Its definition of the grocery sector includes modern retail formats, such as supermarkets and hypermarkets, and traditional retail formats, such as open-air markets and bakers.

"China's fast expansion has been fueled by three main factors: rapid economic growth, its large population and rising food inflation," said Joanne Denney-Finch, chief executive of IGD.

"The report shows Chinese people's robust purchasing power for basic consumer goods, especially food," Wang Xianqing, director of the Institute of Economics at Guangdong University of Business Studies, said Wednesday.

However, domestic residents' spending on advanced consumer goods and services, such as autos, tourism and education, is still lower than in developed economies, Wang said.

The average retail spending per person was 13,420 yuan in China last year, accounting for only one-seventh of the amount in the US, Zhang Zhigang, head of the China General Chamber of Commerce, said at a forum in Beijing Monday.

The primary task of structural adjustment of China's economy is to expand domestic demand, Chinese Vice Premier Li Keqiang said Monday at the opening ceremony of Boao Forum for Asia.

The Ministry of Commerce launched a month-long consumption stimulus program Monday, with at least 80,000 companies including retailers and catering firms set to join the initiative.

People's low incomes and lack of efficiency in logistics systems are the two main reasons preventing rapid growth of domestic consumption, Wang said.

The average salary in the Chinese mainland is $656 per month, less than half of the world's average salary of $1,480, according to a report from the International Labor Organization published last month.

The average salary is based on purchasing power parity calculations.

"Factors such as fuel costs, road tolls and retailers' excessive charges to suppliers have contributed to high logistics costs and pushed up consumer prices," Liu Hui, a consultant at Uni-retail Business and Management Co, told the Global Times Wednesday.

"Authorities have recognized these problems and launched campaigns to crack down on retailers' excessive charges and illegal highway tollbooths," Liu said. "But more measures could be adopted to stimulate domestic consumption, such as lower tariffs on some luxury goods."