Bottlenecks

Despite all the benefits, China needs to overcome problems to truly expand rural consumption with the subsidy program, say industry officials.

"Low incomes and insecure social security services directly hamper Chinese farmers' purchasing initiative," says Zhu Changying, deputy head of Anping Town, Nanchong City, a major farm base in southwest China's Sichuan Province.

The scrapping of the 2,600-year-old agricultural tax in 2006, subsidies to farmers buying better strains of seed and farm machines, and other government measures have helped farmers in Anping Town raise their incomes. In 2008, annual net incomes in the town averaged 4,300 yuan, but farmers spent about 3,000 yuan a year on food and production materials.

"Farmers are no longer so troubled by medical costs since the government introduced the new rural cooperative medical care project in 2003. But they do not have retirement pensions, which is why most choose to save," says Zhu.

High electricity costs also discouraged the purchase of household appliances.

Yan Youqi, 50, of Weizhuang Village, Hengshui City, Hebei Province, says "We have to think about whether we can afford the cost of running a refrigerator."

Weizhuang, with 730 residents in 194 households, had an average annual net income of 4,700 yuan in 2008, largely remitted from migrant workers.

At the village, 1 kilowatt-hour of electricity costs 0.53 yuan. It means farmers will spend 190 yuan a year running a refrigerator.

"The cost is nothing to urban residents. But we farmers have to think whether it is necessary to store so little food in refrigerators at such a cost."

Farmers have their own priorities. Jiao Changning, deputy head of Zhengjia Heyan Town, Hengshui City, says they badly need solar water heaters.

The town had only eight public baths to serve people from 64 villages. Villagers might take a shower in their own courtyards in summer days. But they had to "tolerate" the inadequacy of the baths in winter.

"As tap water systems spread, farmers could enjoy the convenience of warm water if solar water heaters were added to the subsidy list," says Jiao.

(Xinhua News Agency February 2, 2009)