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Appliance subsidies will boost spending

The Ministry of Finance says government subsidies designed to encourage rural families to buy household appliances are expected to increase spending by 1.6 trillion yuan (US$234 billion) over four years. The program became effective nationwide this month.

The ministry estimated sales will reach 600 million units during the period, Xinhua news agency reported.

Selected home appliances sold to rural residents now enjoy a subsidy of 13 percent. Subsides have been applied to computers, air-conditioners, water heaters, TVs, refrigerators and washing machines, in addition to motorcycles and mobile phones.

"The subsidy program is one of the key measures to boost consumption in the countryside and prompt the upgrading and optimization of the industry," Xinhua cited Xie Xuren, minister of finance, as saying.

China is mapping out stimulus packages targeting nine industries to speed up the economic recovery. A plan pending the approval of the Cabinet called for subsidies on a wider range of home appliances sold in the countryside.

Almost two-thirds of China's 1.3 billion people live in rural areas, and household-appliance ownership is 20 years behind that in the cities.

"The huge potential demand in the countryside should encourage home appliance makers to turn their focus back to the domestic market against the backdrop of slumping overseas demand," said Wang Baoan from the Ministry of Finance.


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