Spending down rurally

09:54, December 16, 2010      

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Despite government efforts to stimulate consumption in rural areas, consumer habits indicate a drop in buying, a national think tank said Wednesday.

"Farmers have not seen a dramatic income rise and most are dependent on farming income," said Li Peilin, director of the Institute of Sociology under ChineseAcademy of Social Sciences.

Most rural residents that have seen their income rise are those earning a living in larger cities or with relatives who are doing so and sending funds back home, noted Li, speaking at press conference for the release of the Blue Book of China's Society, published by the Social Sciences Academic Press.

Over the last five years, the rural consumption rate decreased from 10.35 percent to 8.36 percent, the Blue Book report stated. In comparison, although urban residents also consumed less from 2005 to 2008, their rate went up mildly in 2009.

Part of this differential lies in that, despite the rise in average buying power in China, incomes have not kept up with GDP growth.

In 2008, the government rolled out a pilot program to stimulate rural buying of home appliances.

The plan went national in 2009, and is set to end in 2013.

Ministry of Commerce figures show that just over 15 bil-lion yuan ($2.25 billion) worth of home appliances were sold in rural areas between January and November this year, up by 1.8 times year-on-year.

However, Song Feng, vice general manager of Henan-based Xinfei Electric Co, told the Global Times Wednesday that the most popular items are still those priced less than 2,000 yuan ($297.38), indicative of residents' spending habits.

Source: Global Times
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