China’s infrastructure spending is a boon to consumer businesses, says Yum China CEO

Yum China: "We built over 130 restaurants in two months"

Rising consumer spending in China has boosted sales of retailers, but it is the country's infrastructure spending that gives businesses opportunities to expand, said the chief executive of China's largest publicly held restaurant operator.

Micky Pant, chief executive of Yum China, told CNBC's "Squawk Box" Monday that infrastructure is a reason why the company — which operates brands such as KFC and Pizza Hut — is aiming to open 600 new stores this year.

"For us, what's very important is infrastructure spending because that's how we get new malls, new trade zones, new high speed rail stations, new airports and that's continuing at the fastest rate in China compared to any other country in the world. That's how we build 600 restaurants a year because these opportunities are emerging," he said.

Pant's comments came ahead of the release of China's latest economic data. Official statistics showed Monday that retail sales in the world's second largest economy grew 10.9 percent year-on-year in March, beating Reuters forecast of 9.6 percent.

The better consumer consumption growth was behind Yum China's surprise first quarter performance as well. The company reported earlier this month a 1 percent rise in same-store sales, beating analysts' estimate of a 0.7 percent fall.

Pant said China's economic transition into a consumer-led growth model, and the government's continued reforms, will boost the company's prospects in the years to come.

He singled out the country's tax system overhaul in May last year, which replaced a revenue-based tax with a levy on the business' value-add, such as the difference between wholesale and final sales prices. The move will help stabilize China's economic growth and help the country's rebalancing efforts, China's finance ministry said when the shift was announced last year.

"It actually simplified things for us dramatically and given us a lot of operating relief and margin relief as well. It's been very good for the industry. So steps like that, I think, will continue to stimulate the consumer economy," said Pant.

"We have 7,500 restaurants (in China) but I keep reminding people that we have double that number in the United States. And the U.S. is a smaller country than China in terms of population and future GDP."

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