The chill is also being felt in Beijing, where many companies, either state-owned or foreign, have pared down this year's holiday celebrations.

For example, staff at a deluxe resort in the Beijing suburbs told Xinhua that many of its clients, mostly foreign-invested, have cut their holiday party budgets by 70 percent from last year.

A staff member at the Beijing Foreign Enterprises Service Co. (FESCO) said that global financial turmoil had taken a heavy toll on foreign companies, some of which skipped giving holiday gifts to staff or organized a dinner instead of taking staff to a resort for a night.

The FESCO staffer, who declined to be identified, said that one Fortune 500 company cut its year-end party budget from 2 million yuan to 1.3 million yuan.

Staff at the Shunya Communications Group, a public relations firm that organizes parties for clients, said that the budgets for corporate celebrations have fallen 20 percent to 30 percent this year, and even seemingly well-off companies have become frugal. Many companies, they said, were saving for a rainy day.

Individual spending is more resilient. With more than 20 trillion yuan in savings deposits, Chinese households have less cash flow pressure than corporations. But the economic slowdown has suppressed consumption of big-ticket items and impulse purchases.

Cui Jing, a Beijinger who was shopping at the Xidan Shopping Center in the center of the capital, told Xinhua she would buy a lip gloss or a scarf to cheer herself up rather than an overcoat -- unless it was really a bargain.

In Beijing's Tianji Small Commodity Center, an accessories market that serves retail and wholesale customers, one gift shop owner had been worried for days over weakening pre-Christmas sales. With business picking up as the Year of the Ox approached, he was regaining confidence.

"Business is good today. We already have orders for nearly 10,000 bull mascots," he said with a smile, "But people tend to bargain more. It is harder to get money out of their pockets."

To cash in on the annual holiday spree, many supermarkets slashed their prices, which helped sales these days and ended an outright decline that began in October.

The government has rolled out measures to boost consumption in the past two months, including raising subsidies for low-income families and expanding the coverage of social security.

For individuals who took out mortgages to buy residences before October 27 and still have balances outstanding, their interest rates could be reduced to 70 percent of the previous benchmark rates, which varied with the terms of the loans.

Zhang Yansheng, an economist at the National Development and Reform Commission, the chief planning agency, said expanding domestic consumption was the right strategy for China to shake off the financial crisis.

"As long as the Chinese have cash in hand, with no worries over medical care, education or pensions, they will be willing to spend," he said.

The Commerce Ministry has estimated that retail sales exceeded the 10-trillion-yuan mark for the first time last year, which would mean that they expanded at least 21 percent from 2007.

(Xinhua News Agency January 7, 2009)