Li Hong, a saleswoman at Beijing's Ganjiakou Department Store who sells local specialty foods, was surprised by the many sales she had tallied up one afternoon in mid-January, despite predictions that Chinese consumers might start spending less because of the gloomy economic outlook.

SHOP TILL YOU DROP: Shoppers in Harbin, Heilongjiang Province, carefully select items for the upcoming Spring Festival (WANG SONG)

"We once feared the economic crisis would affect our business, but judging by the situation so far, everything is going smoothly," she said, adding that sales so far this January had surpassed those of the same period last year in the run-up to the Spring Festival holiday.

Saleswomen in the clothes section of the department store said they had no reductions in sales revenue because shoppers were attracted by the store's various discounts. Consumers were lined up in front of the payment counters on the day that Beijing Review visited the department store.

The shopping spree during the run-up to the Spring Festival holiday at the end of the month is occurring nationwide as waves of people flock to department stores and malls to buy presents and food.

Hot holiday consumption

While the country celebrated the regular New Year on January 1-3, it will celebrate the Spring Festival, China's biggest holiday, on January 25-31. Both are the country's peak shopping times.

"Spring Festival is the best time for us, because each family has to buy a good deal for the most important festival in China," Li said. She added that most of the department store's customers were buying local specialty foods for their relatives and friends in their hometowns, and that each year the weeks leading up to the holiday were a busy time for selling the items.

Ganjiakou Department Store is not one of the capital's shopping hot spots. It is not located in a commercial area, and its 20,000 square meters of retail space is small compared to that of other retailers. Nevertheless, its sales are booming. Li said two weeks before Christmas, the store began holding different promotional activities to attract shoppers, and its sales revenue has been increasing ever since.

Shoppers with bags full of clothes, cosmetics and foodstuffs can be seen in department stores and malls all around Beijing. The stores are all offering various kinds of sales promotions and discounts to spur the shopping impulse of customers.

The same can be seen in shopping areas in earthquake-stricken Sichuan Province. Chengdu, the provincial capital, launched the "13th Sichuan Spring Festival Shopping Carnival" on January 8. According to the event's organizing committee, more than 300,000 people attended and spent a total of 230 million yuan ($33.6 million) by January 11. Both figures were higher than those of last year.

Apart from the shopping spree, consumers are also rushing as usual to make restaurant reservations for their Lunar New Year's Eve family dinners. The Chinese have a long tradition of having a reunion dinner with their entire family on Lunar New Year's Eve. Nearly all restaurants in big cities reported that they already had fully booked about a dozen days before the dinner.

When Beijing Review visited several restaurants in the capital, the maitre d's said some diners had paid their reservation fees months in advance. Now we must tell customers they are too late to book and that we were all booked out last month, said a waiter at the Hepingmen branch of the famous Quanjude Roast Duck Restaurant in Beijing on January 14.

A report published by the Ministry of Commerce said during the three-day New Year's holiday at the beginning of the month, about 1,000 key retail companies monitored by the ministry sold 12.5 billion yuan ($1.8 billion) worth of goods, a 13-percent increase compared with the same period last year.

Sales before the Spring Festival would be more robust than during the New Year's holiday, the report said. It also said local shopping centers would hold various shopping festivals and promotional activities to attract consumers. And many of the country's export companies whose foreign orders have dropped precipitously are selling their goods in domestic markets, where retailers offer plenty of discounts.

"Although the global financial crisis has had negative affects in domestic markets, Spring Festival sales will keep increasing in spite of that," the report said.

Consumer confidence

Despite the hot holiday sales period, merchants are more concerned about whether such high sales momentum can be sustained throughout the rest of the year.

"I hope so," said Li Hong, although she added that she herself was saving money instead of buying goods as frequently as she did in the past. "Because I don't know whether the future economic situation will influence my income."

Many people hold the same view. According to a 2009 consumer confidence report published by the Horizon Research Consultancy Group in Beijing, more than half of those surveyed said they would reduce their spending this year, with restaurant meals being the first expense they would eliminate. Those surveyed also said they would reduce the amount of money they spent on purchases of luxury goods, health products, entertainment and travel.

The report also indicated that although deposit interest rates at banks were cut several times in 2008, almost 55 percent of those surveyed said they would save more, buy less and invest less this year. Those born in the 1980s, who are known for their high spending, also said it would be important for them to save money.

Liu Xiaomei, a professor from the School of Business at Renmin University of China, said consumption this year might not as bad as the report indicates. He said according to China's experience of combating inflation, high consumer prices would suppress the growth of consumption, but lower consumer prices could spur consumption. In November 2008, the country's producer price index (PPI) growth rate was 2 percent, 4.6 percentage points lower than that of October, while the consumer price index (CPI) grew a mild 2.4 percent in November, the lowest in two years.