A new report by China’s National Commercial Information Center and the China General Chamber of Commerce says retail sales will reach new heights in 2007, thanks to rising incomes and more purchases of jewelry, cars, and other luxuries.

The official Xinhua News Agency anticipated retail sales to rise 14.5 percent to $1.13 trillion in 2007, citing the report issued by two Chinese government bodies. Last year, retail sales in the country rose 13.7 percent, the highest growth rate since 1997, says Xinhua.

Jewelry sales rose 28.5 percent year on year in 2006, according to China’s National Bureau of Statistics.

"The consumer market is expanding by one trillion yuan ($130 billion) each year as the government cuts taxes, raises minimum wages, and increases spending to improve education, welfare, and health care," said the report.

Annual disposable incomes among city dwellers rose 12.1 percent to in 2006, while those in rural regions climbed 10.2 percent.