The government aims to build 510,000 "countryside" stores by 2010 to increase rural spending and add jobs, and plans to encourage consolidation in the retail sector to increase domestic consumption, according to a senior official.

Villagers shop at a store located in the rural area of Rizhao, Shandong province. [China Daily]

"The major way to expand consumption is to increase the income of low-end households," Vice-Minister of Commerce Jiang Zengwei told a press conference yesterday in Beijing.

Jiang said the government plans to establish 150,000 of the stores in 2009 in addition to the current 260,000 stores so rural residents can purchase safe, quality products to increase rural spending.

"We could create about 775,000 jobs by the establishment of these stores by 2010," he said.

That would help the country's more than 700 million rural residents, who are particularly vulnerable to the economic downturn. The government said earlier this month that 20 million rural migrant workers have lost jobs in recent months.

Jiang said the government would also support consolidation in the logistics and distribution sector and the creation of several cross-regional, large-scale circulation enterprises.

Over 99 percent of retail enterprises in China are small- to medium-sized, and that has led to low efficiency and high operation cost, according to Jiang.

For instance, Wal-Mart, the world's largest retailer, achieved sales of US$378.7 billion in 2008. In contrast, the sales of Gome, China's largest retailing enterprise, only amounted to 102.3 billion yuan last year.

Large-scale enterprises are more competitive and less vulnerable to risks, said Jiang. Therefore the government would foster several heavyweight enterprises in the country.

He also said the ongoing reform of China's medical care and education systems will increase domestic consumption, especially spending in rural areas, significantly.

"Once these policies are put in place, I believe that we will see a phenomenal growth in consumption," said Jiang, "it would be too significant to describe with words or figures."

(China Daily February 10, 2009)