(Xinhua)
Updated: 2008-01-15 09:50

BEIJING - China is giving farmers a 13 percent subsidy for home appliance purchase in effort to stimulate sluggish rural consumption and reduce the increasing trade surplus.

The central and local governments will pay 80 and 20 percent respectively of the subsidy, the Ministry of Finance (MOF) said Monday.

Recently, a pilot program was initiated in three major agricultural provinces - eastern Shandong, central Henan and southwestern Sichuan - where farmers who bought televisions, refrigerators and mobile phones could receive such a subsidy, the MOF said on its website.

China currently gives a 13 percent tax rebate to household electrical appliance exporters. Now, the government will give farmers this benefit to  improve their life quality.

Though consumption is playing an increasing role in China's economic growth, investment and export remains a much bigger contributor. Despite this, the country's vast countryside has huge market potential.

Around the country, rural areas have lagged nearly 20 years behind urban areas in terms of popularity of major home appliances, such as TV sets, refrigerators and washing machines, according to official figures.

A total of 197 types of appliances in three categories were available for the subsidies through the end of May for the nation's 800 million farmers.

To date, the government has signed cooperative agreements with 15 household appliance makers, including Haier, Hisense and Changhong, and 21 dealers.

The ministry said rural households could purchase two items from each category and could receive the subsidies at their local township finance governmental agencies after the purchase.