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Rural home appliance policies key to help sector amid slump

THE sales of home appliances in China are not likely to grow sharply this year but government policies in the rural areas will help cushion the impact from an economic slowdown and may benefit exporters, an industry association said.

These policies include subsidies to farmers to purchase home appliances while the fall in appliance exports is expected to slow as tax rebates are raised and the government ensures the yuan is stable, according to a report by the China Household Electrical Appliance Association.

The output of home appliance makers rose 13.9 percent to 682.3 billion yuan (US$99.9 billion) last year. But the growth rate in output fell to zero in December as the global financial crisis dented consumer demand both at home and abroad, the National Bureau of Statistics said.

"The world economy is not seen to recover quickly, and the slack external and internal demand will stay for some time this year," said Xu Dongsheng, vice secretary general of the association. "But the government's strong supportive measures will play a key role in helping the industry to weather the economic turmoil."

In February, the central government unveiled subsidies to farmers which cover a host of appliances, including refrigerators, washing machines and TV sets, to stimulate the huge buying potential in the vast rural market. As a result, home appliance sales in the countryside jumped 72 percent to 2.24 billion yuan in March from a month earlier. The scheme is set to boost spending by 1.6 trillion yuan over four years.

Home appliance exports rose 13.2 percent last year, a slower rate than a 27.1-percent jump in 2007, which industry observers attributed to the yuan's rise of 12.66 percent last year.

"The government is set to maintain the stability of the yuan this year" to give a boost to declining exports, Xu said. He added tax rebates have been raised to help exporters.


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