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China grants $2.93b to boost rural consumption

(Xinhua)
Updated: 2009-02-27 20:14

BEIJING -- China's Ministry of Commerce (MOC) said Friday that the government would grant 20 billion yuan (US$2.93 billion) subsidies in 2009 to boost electronic appliance sales in rural areas.

Job seekers wait for clients next to placards describing their skills in a street Saturday, February 21, 2009 in Wuhan, China. [Agencies]

The plan was expected to stimulate rural consumption up to 150 billion yuan, the MOC said.

Related readings:  Retail networks expansion to create 1m rural jobs  Government sets rural job ball rolling  China to create 775,000 jobs via rural retailing  Unemployment deters rural consumption push

An official with the MOC, Liu Haiquan, told a press conference that rural residents' average income in 2008 reached 4,761 yuan (US$697), which was similar to urban residents' income in the late 1990s, when electronic appliances sales registered a significant growth in urban areas.

Meanwhile, Liu said the government would make the procedures easier for farmers to claim the subsidies. "The MOC and the Ministry of Finance are jointly working on a plan to ensure the funds would be used properly while facilitating procedures for farmers to claim the subsidies."

So far, a total of 2,851 electronic products have been selected in the stimulus plan, including different types of color televisions, refrigerators and mobile phones.

Channel Between Farmers And Markets

The Chinese government also planned to launch about 200 projects this year to create platforms for cooperation between agricultural product producers and supermarkets so as to stabilize food prices.

The total sales of agricultural products now stood at 130 billion yuan. Yet 70 percent of the circulation was made in grain wholesale markets and special markets for agricultural products.

"The sales and production are closely linked in Western countries. Farmers will plant what supermarkets need," an MOC official Chang Xiaocun said.

"Such connection between the supermarkets and farmers could provide up-to-date market information to farmers so they would plant what the market really need. Meanwhile, it would help to stabilize food prices and farmers' income," he said.

The retail giant Wal-Mart has established such a connection in China, which "not only ensured the supply and quality, but also reduced circulation cost by at least 20 percent," Chang said.

In the United States, more than 80 percent of the supermarkets operate in such a business model. In Asia-Pacific regions, the ratio stood at 70 percent.

However, only 15 to 18 percent of the Chinese supermarkets operate in such a model.

More Jobs To Be Created In Rural Areas

The Chinese government will establish and renovate more than 150,000 stores and 1,000 distribution centers in rural areas, which are expected to offer more than 500,000 jobs.

Meanwhile, it plans to build 200 to 300 agricultural product wholesale markets as well 400 to 500 smaller food markets in rural areas, which would offer a combined 600,000 to 700,000 jobs.

The above two plans are expected to create 1.1 million to 1.2 million jobs in rural areas as to ease unemployment pressure and increase income for rural residents, Chang said.