Boston, MA -- (SBWIRE) -- 06/02/2012 -- BMI View: China's IT spending growth is forecast at around 14% in 2012, which is a slight slowdown, compared with 2011. Despite an expected moderation in IT investment and retail spending over the next year, an expansion in consumer credit and a modernisation drive in sectors such as education, healthcare and manufacturing should keep the market in positive trend territory. China's strategy to develop the Western areas of the country will support demand for IT products and services, even if the developed East coast economy hits a slowdown.

Headline Expenditure Projections

Computer hardware sales: US$72.6bn in 2011 to US$81.3bn in 2012, +12.0% in US dollar terms. Forecast unchanged in US dollar terms, with smaller towns and rural areas driving growth, along with replacement of desktops with notebooks

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Software sales: US$13.6bn in 2011 to US$16.2bn in 2012, +19% in US dollar terms. Forecast unchanged in US dollar terms, with the growing global ambitions of any Chinese companies, as well as the still booming domestic market, fuelling investments in software

IT Services sales: US$22.9bn in 2011 to US$26.9bn in 2012, +17.0% in US dollar terms. Forecast unchanged in US dollar terms, with spending projected to grow as banks, telecoms operators and manufacturers invest to meet the challenges posed by growing demand for their services

Risk/Reward Ratings: China's score was 48 out of 100. China ranked sixth in the Asia region in our latest RRR table, ahead of India, Thailand and Vietnam but still behind more developed Asian markets such as Singapore, Australia and Malaysia. The country's relatively low Country Risk score offset the boost from its IT market size, but China should continue to ride up the rankings over time.

Key Trends & Developments.

Growth has decreased slightly owing to government economic cooling measures and uncertainty about the global economic situation. Headline retail figures remained healthy for much of 2011, but BMI expected this growth to moderate. In early 2012, there were concerns that high consumer price inflation could hit demand for durable goods like computers.

By the end of BMI's five-year forecast period, the rural PC and notebook market could account for as much as 35-40% of total China computer sales. The subsidy programme will continue to boost demand from the vast, under-penetrated rural areas. The lower-tier city and towns are expected to be the fastest growing segment of the PC market in 2012, although this has placed pressure on prices.

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