China's annual retail sales are expected to exceed 5,000 billion yuan (US$605 billion) this year, up over 10.5 percent year-on-year, according to a report issued by the Ministry of Commerce on Wednesday.

The Chinese commodity market ran soundly in the first half of 2004, recording its highest growth since 1997, the report said, adding that in the latter half, the growth will slow down slightly.

In the first six months of the year, the retail sales reached 2, 525 billion yuan, a increase of 12.8 percent year on year, and the trend for the rise in the price of grain and oil price dropped from late May, it said.

The catering industry sale witnessed a 24.5 percent growth in the first six months, hitting 337.3 billion yuan.

Meanwhile, the demand for the means of production fell with a slowing price growth and chain stores took a greater proportion in the retail sales sector.

Nevertheless, some problems were still hindering the growth of the commodity market, the report said, naming the low final consumption rate and the weak consumer confidence, sluggish growth in the rural market, increasing stock and occupied funds, feeble circulation system and unresolved regional blockade.

According to the report, Chinese farmers' cash income climbed this year thanks to the supportive measures from the central government. But the increasingly costly rural commodities for production, healthcare and education fees limited their consumption to some extent.

The report predicted that the sales of the means of production in China will be exceed the 10,000 billion yuan (US$1,200 billion) mark this year, up over 15 percent year-on-year and the price will increase by about eight percent.

China's demand for crude oil will be 285 million tons and for coal, approximately 1.78 billion tons this year, a rise of 12.9 percent year on year, the report predicted.

The annual demand for rolled steel will be about 290 million tons, which will be satisfied by the 260 million tons of domestic production and more than 30 million tons of imports, noted the report.

Automobile production is expected to hit 5 million vehicles, of which, passenger cars will be 2.4 million vehicles, up around 16 percent year-on-year, it said.

(Xinhua News Agency July 29, 2004)