March 2, 2009

China's Ministry of Commerce (MOC) said on Friday (Feb 27) that the government would grant US$2.93 billion subsidies in 2009 to boost electronic appliance sales in rural areas, so as to stimulate rural consumption.

 

MOC said the plan was expected to increase rural consumption up to RMB150 billion.

 

MOC official Liu Haiquan said the government would make the procedures easier for farmers to claim the subsidies.

 

Liu also said MOC and Ministry of Finance are jointly working on a plan to ensure the funds would be used properly while facilitating procedures for farmers to claim the subsidies.

 

The Chinese government also planned to launch about 200 projects this year to create platforms for cooperation between agricultural product producers and supermarkets so as to stabilise food prices.

 

The total sales of agricultural products now stood at RMB130 billion, yet 70 percent of the circulation was made in grain wholesale markets and special markets for agricultural products.

 

MOC official Chang Xiaocun said sales and production are closely linked in Western countries and farmers will plant what supermarkets need.

 

Chang said such connection between the supermarkets and farmers could provide up-to-date market information to farmers so they would plant what the market really need, at the same time helping to stabilise food prices.

 

He also said retail giant Wal-Mart has established such a connection in China, which not only ensured the supply and quality, but also reduced circulation cost by at least 20 percent.

 

In the US, more than 80 percent of the supermarkets operate in such a business model, while in Asia-Pacific regions, the ratio stood at 70 percent.

 

However, only 15 to 18 percent of the Chinese supermarkets operate in such a model.

                               

US$1 = RMB6.84 (Mar 2)