02-06-2009 13:37

The Chinese Government's subsidy for farmers to scrap high emission vehicles for cleaner ones has received a warm response from rural areas and the market.

China approved to spend 5 billion yuan from March 1st until the end of the year on one-time subsidies to farmers.
China approved to spend 5 billion yuan from March 1st until
the end of the year on one-time subsidies to farmers.

China approved to spend 5 billion yuan from March 1st until the end of the year on one-time subsidies to farmers to replace their high-emission vehicles, three-wheeled vehicles or outdated trucks with smaller, cleaner new ones driven by 1.3 liter or less engines.

The move has been welcomed by farmers, as it can save as much as 5000 yuan to purchase a new vehicle, to upgrade their older ones which are not safe, with loud noise, slow, and oil consuming. Many villagers have booked new vehicles in advance to enjoy the new policy.

Wei Haitong, one villager said "The subsidy provided by the government for us to buy new vehicles brings us great benefits."

China's auto sales grew 6.7 percent last year, the first time growth has fallen below 10 percent in nearly a decade. The auto industry is looking to the vast countryside, which is getting more affluent but has lagged the consumer boom of the cities. The financial crisis started last year has force many migrant workers to return home. Many of them are considering to buy vehicles to start their own business. The growth rate of vehicle sales have rose from the 35 percent prior to October 2008, to 50 percent in recent months.

Qin Shiji, one auto vendor said "Now many rural residents are getting richer. Many are buying vehicles here. Our sales has been growing faster, with growth rate 20 percentage points higher than last month."

Industry insiders say the 5 billion subsidies mean not only to upgrade outdated vehicles, but also boost the mechanization in rural areas.

Zhang Xiaoyu, Executive Deputy Director of China Machinery Industry Federation said "The 5 billion yuan as an one-off subsidy can vitalize the rural market. In addition, the policy is in line with the central government policies to step up the pace for the rural mechanization. The two facets combined have even more significant meaning."

Analysts say vehicle transportation is an important part to farming. It is used to transport seeds, fertilize, pesticides and other materials, which accounts for one third of the overall work. However, China rural areas are lagging in the use of vehicles. The new move is expected to improve efficiency and restructure China's auto consumption structure.

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Editor:Xiong Qu