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China promotes home appliance subsidy program in rural areas
(Xinhua)
Updated: 2009-02-02 15:53

For 10 years, the most valuable household appliance in herdsman Chaolu's home in north China's Inner Mongolia was the 14-inch TV set, purchased when he earned about 4,000 yuan ($580) a year.

"I could not bring myself to buy a new TV set, although the old one often failed to work properly. I had to support a family with very little money."

Now the old TV has been replaced by a 26-inch LCD color set.

"The new TV set looks great. Sharp images and good sound make it worth the money," says Chaolu, 33, who paid 1,950 yuan ($285) for the set in Taipusi Banner, Xilinguole League, two days before last month's Lunar New Year holiday.

He also enjoyed a 13-percent subsidy, worth 253 yuan, from the government.

"With the money saved, I could buy more than 10kg of mutton. It looks as if the government has sent me a special gift for the Spring Festival."

China promotes home appliance subsidy program in rural areas

Wang Qiaoyun, a farmer from Dainan town, Xinghua city of eastern Jiangsu province, chooses a washing machine which enjoys a government subsidy of 13 percent of the price, on Feb 1, 2009. China expanded the household appliance subsidy program to nationwide right after the Spring Festival holiday of 2009.[Xinhua]

Spread nationwide

China piloted the subsidy scheme for farmers buying designated brands of color TV sets, refrigerators and mobile phones in the three agricultural provinces of Shandong, Henan and Sichuan, as well as Qingdao City from December 2007 through May 2008. They totaled 197 types of appliances.

The prices were capped at 2,000 yuan for a color TV set, 2,500 yuan for a refrigerator and 1,000 yuan for a cell phone. The 13-percent subsidy was split 80-20between the central and local governments respectively. Each rural household was allowed to purchase two items from each category and could claim the subsidies at their local township government finance agencies in 15 working days.

China, the world's largest producer and exporter of household appliances, also gives a 13-percent tax rebate to household electrical appliance exporters and exports half its production every year, said Zeng Xiaoan of the Ministry of Finance (MOF).

"Now, the government will give farmers this benefit to improve their quality of life and to stimulate sluggish rural consumption," said Zeng.

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The government expanded the scheme to 14 provinces, autonomous regions and municipalities and included washing machines capped at 2,000 yuan in December 2008. Covering 53 percent of the rural population, the scheme will run till 2012.

"The rebate made me resolve to spend 1,950 yuan on a new TV," said Chaolu.

On February 1, China furthered the scheme throughout the country to benefit all rural people and added four more products: motorcycles, personal computers, water heaters and air conditioners. Local governments could choose two of them according to demand.

Potential

Huge foreign investment and fast-growing exports have long been major contributors to China's economic development. With the effects of the global financial crisis spreading throughout the world, the government is looking to tap domestic consumption, especially in unexploited rural markets.

China's countryside has lagged behind urban areas in sales of home appliances, such as TVs, refrigerators and washing machines.

Per capita net income for the 800 million rural residents surged by 8 percent in 2008 to hit 4,761 yuan.

"Demand for color TVs in rural areas could touch 100 million units over the next decade, and demand for refrigerators 145 million, as China has 210 million rural households," says Sun Yiding, a spokesman for Gome, China's leading electrical appliance retailer.

China has more than 50,000 townships and the number of rural households accounts for 68 percent of the total families.

"The household appliance purchase subsidy program could help stimulate rural consumption amounting to 920 billion yuan, drive up growth of retail sales of consumer goods in rural areas by 2.5 percentage points, and realize household appliance sales of 480 million units," says Fu Ziying, Vice Minister of Commerce.


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