China grants farmers subsidy to buy TV, mobile phones

BEIJING Sat Dec 22, 2007 10:27pm EST

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BEIJING Dec 23 (Reuters) - China will subsidise its huge rural population in purchases of electric appliances, aiming to boost domestic consumption and reduce ballooning trade surplus, the government said.

From December through May next year, farmers will receive 13 percent rebates in prices for colour television sets, refrigerators and mobile phones, the Ministry of Finance said on Saturday on its Web site.

By 2010 the programme would divert 20 percent of exports to the rural markets and reduce the trade surplus by 10 billion U.S. dollars annually, official Xinhua said, citing Zeng Xiaoan, a ministry official as saying.

China's record trade surplus, with a rolling 12-month figure estimated at 260.3 billion in November, has drawn growing complaints from the U.S. and Europe over Beijing's trade policies.

The subsidy will start with three major agricultural provinces Shandong, Henan and Sichuan; and air conditioners and washing machines would join the subsidy list in the future, said the ministry.

Household appliance makers, including Haier (600690.SS), Hisense (600060.SS) and Changhong (600839.SS) are among the suppliers the government has picked for the programme, the minstry said.

"The move is meant to give farmers more benefits and divert more government expenditure into the consumer sector from fixed asset investment and the export industry," Zeng said.

China, the world's largest producer and exporter of household appliances, exported half its production, Zenng said. (Reporting by Chen Aizhu; editing by Louise Heavens) (aizhu.chen@reuters.com; Reuters Messaging: aizhu.chen.reuters.com@reuters.net; +8610 6627 1211)

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