A recently announced Chinese subsidy program targeting farmers has expanded it’s range of eligible items from the traditional home appliances to computers. This is an effort to spur domestic consumption. While on first reflection this seems like a good plan, note that farmers have a very low income. They have not benefited from China’s once booming economy as much as China’s urban middle class. Family members who have ventured to China’s big cities to become migrant workers are now facing grave difficulties finding employment. Many are forced to return home, causing great concern from the Chinese government. Further, conditions at the village level will not allow computer technology and knowledge to flourish. In these conditions I do not think many will be splurging on a new computer purchase.
___People’s Daily reports:
The government is rolling out a 13-percent subsidy for farmers who buy home appliances from Feb. 1 in a nationwide expansion of a pilot policy in 12 provinces last year. It will also expand the range of eligible products from basic home appliances like TVs and refrigerators to air conditioners, motorcycles and computers.
___ Recently released data from yesterday’s National People’s Congress (NPC), National Committee of the CPPCC Annual Sessions 2009, Xinhua News reports:
Urban per capita annual disposable income reached 15,781 yuan, an increase of 8.4 percent in real terms, and rural per capita net income reached 4,761 yuan, up by 8 percent in real terms.
___PC World has also written that Lenovo has their eyes on the money of Chinese farmers:
Lenovo, China’s largest PC maker, also embraced the program. The company will extend its sales network to 320,000 villages over the next three years, it said Wednesday. It offers 15 computer models eligible for the subsidy program, ranging in price from 2,500 renminbi (US$365) to 3,500 renminbi, it said.
___It is encouraging that the government is paying attention to China’s large rural population. After spending significant time in 2 rural villages this summer I can attest that Chinese farmers are very wary of all government actions, and they should be. Farmers are also, by necessity, very frugal with their hard earned money. Historically they have not experienced the huge growth and increases in income that has happened in cities. One could arguably say that China’s farmers have been used to subsidize huge urban growth by providing inexpensive food and coal, with not a lot in return.
___When I asked some farmers about getting computer access (So I could keep in touch with them and send them photos), they simply laughed. A computer, they told me would cost about 1,500RMB, or about 30% of their net income. Lenovo’s cheapest computer offering of 2,500RMB would account for just over 50% of an average farmer’s net income. Putting this into a North American perspective, if your salary is, say, $50,000, a knockoff computer would cost you $15,000, and a Lenovo would cost you $26,000. Further more, internet access to many Chinese villages is charged by the minute, making connection costs very expensive. Note that there is no government subsidy for connection fees.
___The adoption of computer technology must be done in stages. People need to see personal benefit before they are willing to part with their cash. It will take a lot of education to convince a farmer to part with over 30% of his income for an electronic box to connect to the world. It is only recently that China’s cellular phones have become widespread amongst farmers, allowing them to keep in contact with their family’s migrant workers. The infrastructure to support internet access in the village has certainly not been built. When some families find it hard to justify the cost of a landline telephone, and do not plug in their refrigerator in order to save electricity, one can appreciate the audacity of subsidizing computer technology in China’s rural villages.
___Many farmers might take the opportunity to purchase a new motorcycle. They can use a motorcycle to visit neighbouring villages and family members, and to go to the monthly fairs. As for connecting farmers to the internet, it isn’t going to happen soon.
The price of computers has now fallen so much that I wonder if they should or should not be considered as appliances. Computers are becoming so much like televisions. The television we bought last November has an LCD panel, and can be used as a computer monitor.
Of course, in the west, we have the Internet, so the sources of content are more readily available than in rural China. I wonder if China has a plan to move to digital television.
1. MOORE’S LAW: Double computing power every 2-years…… same price/double the power.
2. Prices have fallen where anyone/anytime/anywhere can get a computer price in the range of $100-$500 Now.
3. Computers are commodities like TV, Radio, bicycles…. China/India/whole world will benefit from cheap computers…