Centers to boost rural economy

By Winny Wang  |   2009-1-1  |     NEWSPAPER EDITION

THE Chinese government is to set up distribution centers in rural areas to boost consumption to counter the fallout from the international financial crisis.

A batch of centers will be set up or renovated over the next two years to enhance procurement, storage, processing and delivery and cut costs in rural areas, the State Council said yesterday.

The move comes after Premier Wen Jiabao's call to boost domestic consumption and improve the supply chain in rural areas to stimulate economic growth at a Cabinet meeting last week.

The government will also increase investment in logistics systems in rural areas, according to the Ministry of Commerce.

In a response to Wen's call for more subsidies to help farmers buy household appliances, the country will expand the product range from February 1 by adding motorcycles, computers, water heaters and air conditioners to the list.

The policy will be adopted in rural areas across the country from the current 12 provinces, the statement said.

The "Home Appliances to the Countryside" policy was first put forward at the end of 2007 to upgrade rural consumption and promote coordinated development in domestic consumption and exports. The central and provincial governments give subsidies worth 13 percent of the selling price to appliance buyers, a sign of a shift in focus from exports to domestic demand.

The country will also boost consumption in urban areas by encouraging trades of durable goods and second-hand vehicles. It is also encouraging mergers to create large and competitive groups to cut operational costs and lower prices for customers.

China will also seek to make the water and power consumption policy more equal between commercial and industrial users to ease the pressure on enterprises pressure, the statement said.