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Unemployment deters rural consumption push

(Xinhua)
Updated: 2009-02-06 21:34

China's rural consumption has been accelerating since 2003, but still lags behind urban growth, even during the good times.

In 2007, retail sales of consumer goods in the country's counties, towns and villages rose 15.8 percent to 2.88 trillion yuan, 1.4 percentage points lower than in the cities. National economic output grew 13 percent that year, the highest annual rate since 1994. It slowed to 9 percent in 2008.

A farmer and his wife collect cement as they build a house in a drought-ridden field near the village of Houyan, south of Beijing Thursday February 5, 2009. China's rural consumption has been accelerating since 2003, but still lags behind urban growth, even during the good times. [Agencies]

Many companies were too reliant on exports and neglected the rural market, says Tang. He wants manufacturers to adjust product design to rural demand and expand maintenance networks in the countryside.

Chen must do his sums before he spends.

When times were good, he would send almost half his wages, about 10,000 yuan a year, back to his wife, child and parents, who subsist off just 3 mu -- a fifth of a hectare -- of farmland, he says.

A majority of the remittance was saved for Chen's old age, as China's pension insurance system does not allow fully transferring pension funds between provinces.

That left Chen with just enough to pay his rent and basic living costs.

He had wanted to buy some "big items" -- better home appliances or furniture for this year's Spring Festival -- but found he could just afford new clothes for his child.

China rolled out a nationwide scheme on Sunday to offer farmers a 13-percent rebate on home appliances such as color TVs, refrigerators, mobile phones and washing machines.

The government's efforts will be hampered further by an inevitable economic trend toward less labor-dependent capital and technology-intensive industries, says Wen.

"That is the key problem," he says, noting the most effective solution is to sharply increase rural subsidies and investment.

The government spent 595.6 billion yuan in boosting rural development and incomes in 2008, up 37.9 percent from 2007, but Wen says there remains "a large scope" considering the proportion of rural population.

Tang suggests speeding up reforms to give migrant workers the same welfare as urban residents and improve the rural social security net as ways to ease their financial burdens.

The most urgent task, however, is to tackle unemployment. The government is urging companies to avoid layoffs if at all possible and employ more migrants in public works projects.

Authorities in Guangdong, Sichuan and Henan have offered subsidized or free skills training to unemployed migrants since December. Cheap loans and tax breaks are promised to migrants who start their own businesses.

It brings some hope to Wang Xiaodong, who was laid off in Shanghai last year and received cullinary training at home in Anhui Province.

Waiting for a train back to Shanghai after the New Year, he says he plans to open a small restaurant on the city's outskirts with some friends, but still feels uncertain when talking about the future.

"I have to turn to others for help in almost all matters, such as applying for licenses. If I can eke out a living in the first year, I'll be content," he said.

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