Friday, February 22, 2008

Chinese Government Subsidy to Farmers for Buying Refrigerators and Televisions

by Richard York

Farmers in the rural regions of China now have reason to smile since their government is helping them to buy things like television sets, mobile handsets and refrigerators. When one such farmer Yuan Shanchun became the first such beneficiary of the government’s grace and when this 51 year old farmer was able to buy a refrigerator he was flooded by queries from everyone he knew about how they could also buy such appliances with the help of the government. For Yuan Shanchun it was an unbelievable incidence and the experience for him was like free food coming down from the sky. The farmer got the benefit under a pilot government scheme under which every rural family in the Shandong region and other two regions of the country were entitled to a 13% government subsidy for buying two sets of television, two refrigerators as well as two mobile phones.

These subsidies for buying appliances are part of the series of policies introduced by the Chinese government. The two main objectives of this scheme are to boost the domestic consumption and enhance the life of 740 million rural residents of the country. This rural lot of China accounts for as much as 56 percent of the nation’s total population but are largely deprived of the benefits of the nation’s growing economy and most of the benefits of the growing Chinese economy went to people residing in the cities. The idea of this policy is quite simple, the tax discounts were also given to exporters who dealt in home appliances and the same rebates are then given to farmers. This way the government hopes to get rid of its policy favoritism for export and this policy of the government would also let the manufacturers of home appliances cash in on the large group of rural consumers of the nation.

Director of the Finance and Trade Office of Zhangqiu County, Du Linjun, said that the scheme will be helpful for absorbing excess capacity of the manufacturers and also boosting rural consumption. The government in the region is also educating farmers about the scheme so that they can benefit from it, and government is popularizing this scheme by distributing leaflets as well spreading the news through the media. Sellers are equally delighted with the introduction of the scheme and have hung up banners on their stores which read home appliances go rural.

Although a 13% subsidy may not be big but even this saving is important to the farmers of China. There are also shopping guides which explain to the customers that discount will be given to them by the government if they buy the standard appliances till May. The government seems to have chosen the best time to introduce the scheme when the risk of the US economic slowdown is at the corner which will affect the nation’s export business which has a lion’s share in the 10% economic growth of the Chinese economy. This move of Beijing is being evaluated against the backdrop of the global economic slowdown.

 

 

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