Farmers will be given subsidies for buying household electric appliances, officials said over the weekend. The move is a bid to stimulate sluggish consumption in rural areas and reduce a rising trade surplus.
A pilot phase of the plan will be carried out in the three major agricultural provinces of Shandong, Henan and Sichuan. Farmers who buy color TV sets, refrigerators, and mobile phones will get 13 percent of their purchases subsidized, the Ministry of Finance said on Saturday.
Zeng Xiaoan is a ministry official. He said a total of 197 types of the three categories of appliances specially made for the rural market will be available till May next year, and air-conditioners and washing machines will be included in the future.
So far, the government has signed cooperative agreements with 15 household appliance makers - including Haier, Hisense and Changhong -- and 21 dealers.
"The move is meant to give farmers more benefits and divert more government expenditures to the consumer sector, away from fixed asset investment and the export industry," Zeng said.
While consumer spending is playing an increasingly important role in China's economic growth, investments and exports are seen as bigger contributors to growth. The country's vast countryside, with a population of 800 million, is still thought to have huge market potential.
Official figures show rural regions lagging nearly 20 years behind urban areas in terms of the use of major home appliances such as TV sets, refrigerators and washing machines.
By 2010, the plan to subsidize the purchases of electric appliances is expected to narrow the gap to 10 years and increase consumption in rural areas by 100 billion yuan ($13.6 billion) a year, Zeng said.
"If one more percent of the rural families buy TV sets priced at 1,000 yuan each, it means 2.5 billion yuan," he said.
The program is essential for expanding domestic consumption as "raising farmers' income remains difficult and the gap between rural and urban areas is large", he said.
To improve farmers' livelihoods and expand rural consumption, the country is also spending hundreds of billions of yuan to extend the country's electricity grid to every remote village by 2010.
China is the world's largest producer and exporter of household appliances. Half of its production of the appliances are sold abroad every year, Zeng said.
Color TV sets, refrigerators, washing machines, air conditioners and mobile phones combined contributed $50 billion, or 28 percent, of China's trade surplus last year, up 45 percent from a year earlier.
Selling more household appliances to rural families will help the country reduce the trade surplus and ease the problem of overcapacity for many manufacturers, he said.
Zeng added that by 2010, the program will divert 20 percent of the exports to rural markets and reduce the trade surplus by $10 billion annually.
1.What are the three appliance makers the government signed cooperative agreements with?
2.The country plans to extend the electricity grid to every remote village by which year?
3.The program is expected to reduce the trade surplus by how much annually?
1.Haier, Hisense and Changhong
（英语点津 Celene 编辑）
About the broadcaster:
Jonathan Stewart is a media and journalism expert from the United States with four years of experience as a writer and instructor. He accepted a foreign expert position with chinadaily.com.cn in June 2007 following the completion of his Master of Arts degree in International Relations and Comparative Politics.