By He Chunmei | From | On June 1st, 2012

Government announces the start of a one-year program to help spur domestic consumption.

(Beijing) – Buyers of air conditioners and flat-screen TVs can enjoy subsidies of up to 400 yuan starting June 1, 2012, the government says.

The National Development and Reform Commission and Ministry of the Industry and Information Technology announced the details of the one-year program to boost domestic consumption of home appliances on May 29.

The Ministry of Finance will set aside 26.5 billion yuan for the program.

Consumers can take advantage of the subsidy with either a coupon or it will automatically be deducted from the original purchase price at the counter.

Industry analyst Liu Buchen said the program was aimed at helping the home appliance industry upgrade and to enhance the competitiveness of Chinese manufacturers.

“This measure will improve the sales income and profitability of home appliance makers,” he said. “Consumers will be more inclined to select products made by large companies.”

The central government should not use such measures to intervene in the market economy frequently because it would make companies dependent on them and weaken their competitiveness, Liu said. He added that the big firms had earned their places in the market without the benefit of such help.

Because some small and medium-sized home appliance makers cheated on subsidies when the last program was launched in late 2008, companies with annual sales volume of less than 100,000 units were excluded this time, said an analyst at Orient Securities Co. Ltd., who declined to be named.

Liu Yi, analyst from the China Securities Co. Ltd., said more such subsidies were on the way.

“Economic growth has been declining fast and stabilizing the growth rate is the main task for now,” Liu said. “So we predict that detailed subsidy policies on refrigerators, washing machines and water heaters will come out soon.”

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