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Ministry:service consumption and rural area to support market boom
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12:58, February 18, 2009

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There are many favorable factors to foster the sustainable and rapid growth of Chinese consumer market and the rural market has great consumption potential, said Yaojian, spokesman of Ministry of Commerce at a press conference on Feb. 16th, 2009.

Yao Jian said that China will adopt more macro-control and social security policies to enhance consumers’ purchasing power and spending expectations and to boost the demand for service industry.

China’s rural areas shows very promising market potential, Yao Jian pointed out. The rates of refrigerators, air conditioners and home computer ownership in rural areas are only 27.5 percent, 8.9 percent and 6.9 percent respectively of those in urban areas.

Retailing sales of 1,000 key retailers grew 24.5 percent year on year in January 2009. Revenues from services increased significantly. Yao regards those figures as effects of policies stimulating demand and economic growth. He also believes that service consumption is playing a bigger role in life in urban areas.

In addition, Yao Jian considered that many experienced and skilled workers and businessmen in coastal areas have started new business in the Midwest, a trend that is expected to promote employment in rural aras and to increase rural consumption.

Selling and after sale services are more accessible to farmers due to the government’s "Home Appliances to the Countryside” scheme, which gives farmers a subsidy of 13 percent of the selling prices for purchasing of certain kinds of home appliances such as refrigerators and computers.

Another important project has been conducted since 2005. With the financial support from the public fund, retailers in urban areas are encouraged to set up chain stores in rural areas.

China has built 260,000 such outlets in rural areas since 2005 and will build and renovate another 150,000, as well as 1000 merchandise distribution centers, in 2009, according to the notice released by the Ministry of Commerce on Feb 12th, 2009.

Statistics show that China's domestic retailing sales of consumer goods recorded 10.8 trillion yuan in 2008, a record high increase of 21.6 percent since 1996. The price-weighted actual increase is 14.8 percent, a 2.3 percent increase from 2007 and 5.8 percent higher than the country’s GDP growth.

By People’s Daily Online



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http://english.people.com.cn/90001/90776/90884/6595489.pdf