China cracks down on home appliance subsidy fraud

BEIJING - The Chinese government recently moved to crack down on scalpers trying to take advantage of a nationwide subsidy program that was designed to fuel home appliance sales in rural areas.

In a joint statement sent to local government departments on Friday, China's ministries of commerce, finance, industry and information technology ordered their subordinate agencies to tighten oversight over the usage of subsidy logos by home appliance manufacturers.

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The subsidy logos are used by rural consumers to help them tell the difference between subsidized and non-subsidized home appliances. Reports of scalpers reselling their logos to defraud the subsidy system prompted the ministries' actions, according to the statement.

The ministries stated that they will severely punish people who have illegally sold the logos to home appliance manufacturers.

A campaign to prevent unauthorized home appliance sales under the subsidy program will be launched in May and will last until July of this year, according to the statement.

Boosted by the subsidy program, sales of home appliances in rural China rose by 128 percent to 94.43 billion yuan ($14.5 billion) in the first four months of this year, according to data from the Ministry of Commerce.

During the same period, sales of home appliances in rural areas reached 39.515 million units, an increase of 91 percent from the same period last year.

China started the subsidy program in February 2009 to stimulate rural consumption and buoy the nation's economic growth during the global economic downturn.

Under the program, Chinese farmers can receive subsidies equal to 13 percent of the price of designated types of refrigerators, televisions, washing machines, computers, air conditioners, mobile phones, water heaters, microwave ovens, traditional ovens, electric bikes, gas stoves, pressure cookers, electric cookers and DVD players.

The Chinese government has handed out 39.17 billion yuan in subsidies since the program started.