To drive rural demand for energy-efficient models

The Ministry of Finance and the National Development and Reform Commission are considering another round of the countryside campaign to drive vehicle demand in rural areas.

The Ministry of Finance will be responsible for drafting the final policy, according to Shanghai Securities News.

Sun Chao, a villager in Anhui province, in his new truck. Local media are reporting that a stimulus package would include subsidies for purchase of heavy-duty trucks in rural areas. [Hu Weiguo / for China Daily]

The program will provide subsidies to farmers who replace used vehicles with more energy-efficient models.

A similar program that began in 2009 ear-marked 5 billion yuan to subsidize farmers who replaced their used vehicles with light trucks or minivans powered by engines 1.3 liters in size or smaller.

By the end of the year, sales of small vehicles surged by 1 million units. By the time the policy concluded at the end of 2010, another 500,000 units were added.

China surpassed the US in 2010 to become the world's largest auto market by units sold, mostly due to sales growth in small vehicle segments.

After the program and other stimulus policies ended at beginning of 2011, China's auto market only grew 2.5 percent over the following 12 months, the lowest rate in 13 years.

Analysts said that weaker investment in fixed assets and failing global demand for a range of commodities is leading the government to formulate policies to stimulate domestic consumption.

Statistics from the National Statistics Bureau showed that since April total retail sales in the countryside has outpaced cities.

Media reports said that the new countryside vehicle program is expected to include heavy-duty trucks, noting farmers have greater demand for passenger and commercial vehicles than minivans and light-duty trucks.

Dong Yang, secretary-general of the China Association of Automobile Manufacturers, said he hopes that if the program is resumed it will not be a short-term move.

He said a long-term initiative would have a lasting effect on the automotive market and be good for the overall economy.

A similar policy in the US in 2011 offered any US resident $3,500 to $4,500 in cash if they replaced their old car for a more energy-efficient vehicle.

xuxiao@chinadaily.com.cn