China to subsidise energy-efficient products to boost buying

03 June 2009 10:39  [Source: ICIS news]

SHANGHAI (ICIS news)--The Chinese government plans to subsidise energy-efficient products in a bid to boost domestic consumption and protect the environment, a government official and analysts said on Wednesday.

In the next three years, the government plans to subsidise such energy-saving products as air-conditioners, refrigerators, flat-screen television sets, microwave ovens, electrical motors and washing machines, said Zhao Jiarong, a top official from China’s National Development and Reform Commission (NDRC).

The NDRC said the subsidy scheme was expected to boost consumer spending by up to yuan (CNY) 400bn-500bn ($58.6bn-73.2bn) per year.

The scheme also aimed to save the country 75bn kWh of power per year, the equivalent of 75m tonnes of carbon dioxide, the NDRC said.

The government would provide the subsidies until the market share of energy-efficient appliances reaches 30%, Zhao was quoted as saying on the NDRC website.

The market share of energy-saving appliances was expected to rise to over 30% by 2012, compared with the current 10-20%, according to the NDRC.

"From the earlier subsidy scheme of homes appliances for rural areas, to the subsidy on the replacement of old automobiles and home appliances with new ones, and to the subsidy on energy-efficient products, we can see a clear trend of the government’s macro measures  that is, to spur domestic consumption," said Yi Lei, an economist with Beijing-based Shanxi Securities.

"Obviously, the government [is using] ‘energy saving’ as a catalyst to call on consumers to spend more. However, the ‘energy saving’ is also the country’s long-term target for environmental protection. The government also encourages consumers to buy power-saving products to raise the market shares of such appliances," said Yi Lei.

"It is a good measure which will not only boost demand but [will also] promote environmental protection," he said.

China had to take steps to drive domestic consumption an important factor in the country's GDP growth  in the wake of slipping exports due to the global financial crisis, analysts said.

Each energy-efficient air conditioner would receive a subsidy of around CNY 300-850 subsidy. This move would help save nearly 6bn kWh of power within two years and boost the market for air conditioners up to CNY60bn, according to the NDRC.

The government has yet to release details on the subsidies for other energy-efficient household goods.

So far this year, the government has allocated a CNY600m subsidy to promote the consumption of 100m power-efficient light bulbs and a CNY1bn subsidy to promote the consumption of 10,000 energy-efficient and alternative-energy cars in 13 cities around the country, the NDRC said.

 ($1 = CNY6.83)

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