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Record rural consumption fuels economic expansion

By Lan Lan (China Daily)
Updated: 2010-01-16 07:54

China's fast-growing rural market is fuelling the country's economy with record growth in 2009, driven by farmers' rising incomes and a slew of stimulus policies.

Growth in rural consumption expanded around 15.5 percent in 2009 and outpaced that in urban areas (15.2 percent) for the first time, said the Ministry of Commerce on Friday.

The total amount of rural consumption is estimated at 4 trillion yuan ($586 billion), the ministry said.

The growth is partly driven by the government's stimulus policies. To expand domestic consumption, early last year, the government launched a series of incentives for farmers ranging from purchases of agricultural machinery to home appliances and electronics.

However, the root cause of the growth can be attributed to the rising income of Chinese farmers, said Xu Xiaoqing, a rural economics expert of the Development Research Center of the State Council.

The average annual income of Chinese farmers has increased 6 percent every year since 2004, hitting around 5,000 yuan last year, according to official statistics.

"Consumption in rural areas will retain strong growth momentum this year as the government continues with its stimulus policies," Xu said.

He said there is a huge potential market in rural areas. The population at county level and below accounts for two-thirds of China's total, while they only consume about one-third of the nation's commodities.

Domestic consumption is expected to account for 51 percent of last year's economic growth, said Yao Jian, a spokesman for the ministry.