China farmers to get fridges, TVs to boost consumption

By Jason Subler

ZHANGQIU COUNTY, China (Reuters) - When Yuan Shanchun became China's first farmer to receive a government subsidy to buy a refrigerator, he was inundated with queries from just about everyone he knew asking how they could get one too.

"Who can believe it? How come the government is giving us money to buy things?" the bubbly 51-year-old asked, speaking in the thick accent of the eastern province of Shandong.

"This is like free food falling from the sky!"

Yuan was the beneficiary of a pilot scheme entitling each rural family in Shandong and two other provinces to a 13 percent government rebate on the purchase of up to two television sets, two refrigerators and two mobile handsets.

The subsidies are part of a battery of policies by Beijing aimed at spurring domestic consumption and improving the lot of the country's roughly 740 million rural residents, who make up 56 percent of the population but have not benefited nearly as much from the economy's roaring growth as people in cities.

The concept is enticingly simple: give farmers the same tax rebates long given to exporters of home appliances, removing a policy bias towards exports and helping manufacturers tap a potentially huge pool of consumers in rural China.

"This can help soak up producers' excess capacity and kick-start rural consumption," said Du Linjun, director of the Finance and Trade Office of Zhangqiu County.

The local government has pulled out all the stops to make sure local farmers learn about the opportunity, blanketing local media with reports and handing out leaflets.

Retailers hang huge red banners in front of their stores proclaiming the program, dubbed "Home appliances go rural".

SHOPPING GUIDES

While a 13 percent discount might not sound like much, the bustle inside one of Zhangqiu's electronics shops suggests that the savings really matter to farmers.

"Shopping guides" donning red-and-gold sashes explain to a steady flow of customers that the government will give them a rebate if they buy a qualified refrigerator, TV or mobile phone by the end of May.

They point to a sign that lists the price and rebate for each model. In an indication of how much every penny matters to the rural poor, the rebate calculations are made to the "fen", or hundredth of a yuan. That's equivalent to about a seventh of a U.S. cent.

Sales are brisk. By 2 p.m. one recent Monday, the "Goodaymart" had sold 30 refrigerators and TVs. Since the program started on January 4, the store has sold an average of 120 rebate-eligible items per week.

Xu Guangmei and her husband, Xu Chengshe, traveled 25 km (16 miles) from their mountainous village of Nanhenghe to Zhangqiu to buy a refrigerator.