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Agency wants more subsidies

CHINA should grant more subsidies to encourage the purchase of homes, cars and home appliances to further boost domestic consumption during the economic downturn, the State Information Center, which is affiliated to the country's top planning body, said in a report.

The central government should set up a fund to help local governments invest in affordable homes, the report said. The center also called for higher housing subsidies for buyers as the current rules were mapped out in 1998, when average home prices were 3,500 yuan (US$512) to 4,000 yuan a square meter.

China's retail sales grew 21.6 percent last year, 4.8 percentage points higher than a year earlier. However, the figure doesn't reflect the whole picture as it fails to include spending on services and homes, the research agency said.

China's total consumption, adjusted for inflation, rose 9.6 percent in 2008, 1.5 percentage points lower than in 2007, due to the slumping real estate market and spending cuts by consumers during the crisis, it said.

"The country's stimulus package to boost domestic consumption has paid off, but it should make more efforts to maintain the trend and spur spending on homes and cars, and encourage rural consumption," the report said.

Besides tax breaks for buyers of energy-efficient cars, the country should restrict highways from collecting tolls, the center said.

It also called for a simplified procedure for rural consumers to get subsidies to buy home appliances, and said more types of appliances should be involved in the policy.

In February, the central government unveiled subsidies to farmers that cover home appliances to stimulate the huge buying potential of the rural market. China expects to hand out 20 billion yuan in these subsidies this year, generating 1.6 trillion yuan in sales over the next four years.


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