Saturday, May 8, 2010

Chinese economy sky-rockets: Sales in rural areas increases 510%

China started a subsidy program in February 2010 to increase Chinese rural areas. This program, while help poor rural areas, far away from malls and big supermarkets, increases the Chinese consumption and China economic growth, while Europe and United States still struggles to recover from their crisis.

And worked. More than expected. While the subsidy only covers 13% of total price, rural consumption increased.... a 510%! But let's discover how works.

  • Main points of China's subsidy
- Aimed to: Chinese families living in rural areas. The average rural Chinese family earnings are based in farming or works related to farming.

- Subsidy: Chinese government subsidy covers 13 percent of the price of some home appliances.

- Home appliances covered: Television sets, mobile phones, computers, air conditioners, water heaters, washing machines and kitchen appliances as micro-wave ovens, ovens and refrigerators

- Government, seeing the exit of this operation, added another six items: Electric bikes, DVD players, smoke exhaust ventilators, gas stoves, pressure cookers and electric cookers.subsidy.

  • Results?
Results were better than expected. While an increase of rural China purchases was expected, results are that the increase, in numbers, are more than 500%.

- Between January-April period, Chinese bought 20.84 millions sets of subsidized home appliances. 370% more than the same period at 2009.

- In April alone, 4.8 millions sets were sold, 170% more than 2009 April.

- Chinese economy ministry's website said total sales of subsidized appliances surged 510 percent year-on-year to 41.7 bn yuan ( €4.81 bn, $6.13 bn) during the period..

- Top sold appliances: Tv sets and refrigerators in January-April period totaled 3.2 bn yuan each. Computers 1 bn yuan, according to China's government.

This way, Chinese government increases sales, while Chinese rural areas families life quality multiplies and labor saving appliances give more time to do more productive work at factories, farms and offices, increasing the whole income of China.

Because labor saving appliances will free up workers to do more lucrative work at factories and in offices and increase the income of the country. No one wonders why Chinese economy is increasing.

Related articles:

China's economy grows nearly 12 percent

China oil demand 12.8% growth Share

Chart: Light Weight Vehicle Sales recovery in America

After a recession at US, Autos and other Light Trucks show a sign of slight recovery. Even that, there is room to improve and we're experiencing just the start of an America economic recovery (we hope).

Click to enlarge. Font: Economic Research

  • Why is so important?
Motor vehicle sales are a big part of American population spending, like at others first world countries, and can show us important information about consumer spending trends, and the direction of the recovery o deterioration economy.

So, an increase of the light weight vehicle sales, means an increase of the American families savings and, therefore, potential spending.