China looks to farmers to boost economy
Beijing (AFP) April 17, 2009
With his sun-baked face and rough peasant hands, 47-year-old Chen Meiji does not look like the saviour of the Chinese economy, but that is the role his government wants people like him to fill.
Like hundreds of millions of other farmers, Chen is being offered government subsidies to buy household goods, which is meant to boost rural consumption, and in turn reignite the world's third-largest economy.
"I want to buy a fridge," said Chen, walking down the aisles of a white goods store inside a shopping centre in a Beijing suburb, as he carefully examined the products on display.
Signs plastered all over the refrigerators advertising 13-percent government subsidies immediately had Chen carry out fast math.
"Thirteen percent is pretty good. That's a 325-yuan (47-dollar) discount on a 2,500-yuan refrigerator," he said.
China officially launched the subsidy programme at the beginning of 2009, giving out discounts on household appliances to rural residents in an attempt to increase their purchasing power.
As the financial crisis continues to bite and exports drop, boosting domestic demand in China -- which only makes up 35 percent of the GDP -- has become a top priority for the government.
The subsidy campaign started as an experiment in just a few provinces at the end of 2007, but since February this year all 727.5 million rural residents in China -- or 55 percent of the population -- are involved.
Those that have a rural "hukou", or resident permit, and live in big municipalities like Beijing, are also included.
Eight types of household appliances are included in the subsidy plan, and all have a price limit -- 1,000 yuan for a mobile phone, 2,000 for a washing machine.
Chen however is the only shopper that afternoon, and in a nearby store belonging to the big chain Dazhong, no rural residents are in sight.
A shop assistant at the refrigerator section of the store advised to come back after May 1 as China's summer kicks in.
"It's still the low season for these types of appliances," she said.
But despite a slow start in Daxing, the government has said the subsidy programme, which is expected to last four years, is already a success.
Li Xiaochao, spokesman for the National Bureau of Statistics, said this week there had been a faster growth in sales in rural markets than in urban areas in the first quarter of the year.
"This shows that the policy of bringing home appliances to the countryside has played a positive and important role in promoting consumption," he said.
According to the Ministry of Commerce, sales of subsidised appliances have totalled four billion yuan since January, including 2.2 billion in March alone -- a 72 percent rise from February.
The official Xinhua news agency said that in 2009, the government had planned to make 20 billion yuan available in subsidies, which would equate to around 150 billion yuan in rural consumption of household appliances.
But investment bank Merrill Lynch said the measures to promote consumption in China "will not be enough to make a big difference" to boosting the nation's economic growth numbers.
The difference, however, might be felt among the rural residents themselves, whose average income was 4,140 yuan in 2007, compared with 24,932 yuan in cities.
And with at least 20 million migrant workers out of work due to the crisis and are no longer able to send money back to their families, the subsidies might be all the more welcome.
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