Under a pilot project aimed at stimulating rural consumption,
farmers in Shandong, Henan and Sichuan provinces will get
government subsidies when they buy color television sets,
refrigerators, and cell phones.
The government will select qualified enterprises to supply
specially tailored home appliances under ceiling prices. And the
rural buyers will get back 13 percent of what they pay for such
items from local financial departments.
There has been plenty of talk about stimulating rural
consumption. This is to date the most practical move to really tap
that tantalizing potential.
And the reward will be tremendous. According to statistics
provided by competent authorities, every 1 percent of growth in
sales of one item of a home appliance in the country's rural areas
means an additional demand of more than 2.5 million units. If the
practice is adopted nationwide, and the scope of subsidies is
expanded to gradually include such popular items as air
conditioners and washing machines, as Ministry of Finance sources
indicate, the increase in rural market demand may be
phenomenal.
Such subsidies will prove instrumental in waking up market
demand in the vast rural regions when income growth falls short of
expectations. This may actually be the only effective approach for
the time being.
The country's dual-track development strategies, which to a
great extent sacrificed rural interests for urban well-being, has
placed on the government a heavy moral burden to compensate. The
subsidies, in a sense, are an ideal way to repay that moral
debt.
Beyond that, the goodwill will harvest a huge benefit - the
coveted demands from the populous yet nearly untapped rural market.
For a long time, domestic experts and decision-makers have pinned
high hopes on the largely potential rural market for upgrading
domestic consumption. The concept of subsidized consumption,
however, is quite imaginative. It is a functional way to improve
quality of life in our relatively underdeveloped countryside.
The authorities have promised to provide rural consumers home
appliances of reliable quality and at reasonable prices. They have
even come up with ways to prevent suppliers from dumping obsolete
products onto the rural market, which is essential in determining
whether or not the subsidized appliances can win the hearts of
rural consumers.
(China Daily?December 24, 2007)
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