Rural Consumption Drive

In the US when a consumer stimulus package is considered consumers are provided refunds from the IRS because their income and tax returns are on file in the IRS digital database. The US population is approximately 300 million people.

In China there are 900 million people in the rural areas and 400 million in urban areas. it is impossible to issue a "refund" to spur consumer demand. The rural areas are still very poor and have yet to feel the impact of the modernization on the east coast.

China Daily has published a summary of how the Chinese government is trying to stimulate growth in the rural areas...
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The expert pointed out the domestic consumption, especially the largely untapped rural market, would be a long-term driving force of sustainable growth.

China announced on November 30 its plan to expand a pilot program to subsidize rural residents in buying household appliances. The incentive program is offered to all rural areas in the country, where 900 million people live.

Yuan Shanchun, a farmer in Xibeiyu Village, east China's Shandong Province, where the program was piloted, was the first to benefit from the program when it began in April. He received 241.15 yuan of government subsidy half month after buying a refrigerator priced at 1,878 yuan.

Within half a year, another 100 households in his village followed his suit to buy new TVs, washing machines and refrigerators.

"Most of the farmers made their first purchases of the luxuries, like me," said Yuan, who found the fridge can keep food more fresh and hygienic than his backyard storage.

Experts estimated that the incentive would effectively boost 920 billion yuan of rural consumption on home appliances in the next four years.

"There is still a large room for the government to mull more policies to boost consumption, such as raising the threshold for taxable income and increasing income for lower-income earners," said Cai Zhizhou, an economist with Peking University.

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Think about how fast consumerism could grow among China's 900 million individual rural consumers if this incentive package is implemented successfully !

There is still considerable growth opportunity in China and companies have a bright future if theya re able to find the niche to generate revenues and profits.