Subsidies boosts rural consumption

A large proportion of the government's massive stimulus plan is aimed at tapping the rural market and giving a boost to consumption in agricultural regions. Subsidies were given to encourage farmers to buy home appliances and vehicles.

For the first time in 12 years, growth in consumer consumption in rural areas exceeded figures in urban areas.

Sales in the countryside hit 4 trillion yuan, up 15 and a half percent.

The growth came as the government implemented policies to stimulate rural markets.

Jia Kang, official of Ministry of Finance,said, "Regarding home appliances, cars and motorcycles, the central government extended 25 billion yuan in subsidies to rural areas. Local governments also cooperated with the policy. So the total sum may be more than 200 billion yuan."

Last year, the State Council issued a subsidy plan to encourage rural vehicle sales. Subsidies worth 5 billion yuan were allocated to the project.

The government then expanded its campaign for promoting sales of home appliances to all rural areas. A 13 percent subsidy was offered.

Meanwhile, the Commerce Ministry is also building the rural retailing network to boost consumption. 100,000 more commodity outlets will be built in rural areas providing all kinds of products.

Minister of Commerce Chen Deming said, "For this year, we will add more. The amount of subsidies for TV sets and mobile phones will be doubled. 7 more product categories will enjoy a 25 to 75 percent discount."

Now the government is working on new rules to promote the sales of construction materials in the countryside, which will encourage farmers to build their own homes.

Aside from subsidies, the government is also looking to boost rural consumption by raising low insurance standards, decreasing taxes on vehicle purchases, and providing assurances for business loans.