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China expands household appliance subsidy program

By Tong Hao (China Daily)
Updated: 2008-12-01 19:08

China is expanding a government subsidy program to encourage more farmers to buy household appliances, aiming to sell 480 million units worth 920 billion yuan in a 4-year period to spur domestic demand.

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Farmers in 10 more provinces and cities can buy household appliances and get government subsidy from today on, the Ministry of Finance and other ministries said on Sunday.

The campaign, under which farmers can buy the designated appliances and receive a 13 percent subsidy from government, first started on December 1, 2007, covering four provinces and cities – Shandong, Henan, Sichuan provinces and Qingdao city.

The campaign will be further expanded, from December 1, 2008 to the end of November 2012, to another 10 provinces and cities such as Inner Mongolia, Liaoning, Heilongjiang and Chongqing. The remaining 22 provinces and cities will kick off the campaign from February 1, 2009 to the end of January 2013, the ministries said.

"Chinese economy slows down due to the global financial crisis. Weak demand of overseas market has endangered some export-oriented industries," says Vice Minister of Finance Zhang Shaochun. "As a measure of the active fiscal policy, this campaign is important to maintain a steady and fast economic growth."

Under the program, a total of 3.5 million sets of household appliances have been sold to rural areas by this October, a 30 percent increase compared with the same period last year.

To receive the subsidy, color TV sets, refrigerators, washing machines and cell phones must be sold below 2,000 yuan, 2,500 yuan, 2,000 yuan and 1,000 yuan, respectively.

China is now the largest manufacturer and exporter of color TV sets, refrigerators, washing machines and cell phones. The campaign is expected to digest the excess production capacity of Chinese household appliances and benefit its upstream industries like iron and steel, plastic and nonferrous metal melting, industry analysts say.