China has reaffirmed its efforts to promote home appliance sales in rural areas, in an effort to boost light industry. A 13 percent subsidy will now be offered to farmers who buy microwaves and stoves, in a bid to stimulate rural consumption.

The new plan allows every household to buy two of each item at a reduced rate, rather than just one. Last October, a 13 percent subsidy was announced for farmers who buy home appliances, including color TVs, refrigerators, and mobile phones. The government says it will promote the policy nationwide in February. It's estimated that the subsidies will reach 15 billion yuan in 2009 driving overall domestic demand to over 100 billion yuan. The policy has not only benefited farmers, but also appliance manufacturers.

Cao Jianhai, Research Fellow of Industrial Economic Research Inst. of CASS said "In fact, there has been strong demand for home appliances in rural areas. But the high prices compared with their incomes have driven farmers away. That's the main reason for farmers' relatively weak consumer power. If prices and taxes are cut further, farmers can then afford cheaper home appliances. This is good for economic growth, and will help spur consumption."

(CCTV February 23, 2009)