As it takes measures to increase farmers' income, the Chinese Government is keeping a close eye on farmers' pockets, hoping to further boost the national economy by stimulating consumption in the rural areas.

At the central economic work conference held earlier this month, the Chinese Government held that expanding domestic demand should be a long-term strategy for China's economic development, with farmers' consumption high up on the demand growth agenda.

With a population of 400 or so, Xiaoshunjiang Village in Shaoxing County, in east China's Zhejiang Province, is a 30-minute drive from the nearest town. But the villagers have to take many tortuous paths with 130-odd bends before they get to the town. "In the past, we only went to shop in town during festivals because of the difficult access,"said the 57-year-old farmer Song Handa.

Since a 100-square-meter supermarket was opened there, satisfactory commodities are now available for Song at his village. Like markets in the urban areas, the Xiaoshunjiang market is lit with fluorescent lamps, hundreds of commodities with price tags are neatly laid out on shelves and a cashier's machine is installed at the door.

"The supermarket has been in operation for almost a year. Our business has been better than expected, with daily sales averaging more than 1,000 yuan (123 U.S. dollars)," Song Mingxia, a uniformed hostess, said with a smile.

The countryside supermarket is part of an ongoing program to establish 250,000 new-type rural stores in most counties across China for the 2005-2008 period.

The Central Government will earmark 60 million yuan (7.4 million U.S. dollars) for the program and take measures to attract private capital. Funding efforts started in July this year.

Though thrift has always been valued as a virtue among Chinese farmers,"they are not unwilling to spend money,"said Ding Yaomin, head of the provincial economic and trade commission of Zhejiang. "The lack of a comfortable consumption environment has put a damper on consumption in some rural areas around China," Ding added.

Even rich farmers in economically developed Zhejiang with a per-capita GDP of 3,000 U.S. dollars found it difficult to buy the goods they really wanted, since for a long time they only had access to small groceries with limited choice, according to Ding.

Zhejiang has been carrying out the rural supermarket program since early last year. 397 out of 1,279 townships in the province now boast franchised supermarkets, while 7,760 grocery shops, or 20 percent of the province's total, have been or are being upgraded.

Huang Yongquan and his wife have run a grocery at Xiaoshunjiang village for more than a decade. Facing the pressure from their new rival, the supermarket, Huang said, "There are more lower-priced goods at the supermarket. It has tempted the villagers away. We have to cut prices to keep up."

According to Yin Rending, vice general manager of Suguo Supermarket that is set to tap rural markets, Suguo has launched 1,405 outlets in Jiangsu Province, east China, and 50 percent of its sales come from the rural areas.

"Through local distribution networks, we not only sell commodities to the countryside, but also purchase farm produce for towns and cities, thus helping increase farmers' income," Yin said.

Dr. Chen Huai with the Shanghai Research Institute of Economics, part of the Shanghai Academy of Social Sciences, said, "The Government has had stores revamped and supermarkets built for the countryside and has enabled farmers to get access to good-quality, low priced industrial goods. All this is bound to stimulate buying and consumption among rural dwellers."

"In order to expand consumption, however, it is essential to eventually increase farmers' income," Dr. Chen said.

Source: Xinhua