Energy-saving appliance subsidy nearing its end

An industry association has suggested that government authorities not renew a one-year national program of subsidizing energy-saving home appliances that will expire at the end of May, the Beijing News reported Thursday.

The China Household Electrical Appliances Association has submitted suggestions to the Ministry of Industry and Information Technology, the Ministry of Finance and the National Development and Reform Commission, the newspaper said, citing a person in charge of the program at the association.

The subsidies began in June 2012 and cover air conditioners, flat-panel television sets and refrigerators that meet energy-saving standards. Consumers can get subsidies ranging from 70 yuan ($11) to 550 yuan when purchasing these appliances.

"It's not decided yet whether new stimulus policies will come out," the source said.

The three government agencies are still asking for opinions from relevant parties about the policy, but appliance producers hold different views.

Gree Electric Appliances Inc and Midea Group said they support the exit of the policy, the newspaper said.

Fang Hongbo, chairman of Midea Group, told the newspaper that development in the industry should rely on market forces, not stimulus policies.

Other appliance firms, such as TCL Corporation and Skyworth Digital Holdings Ltd, hope the policy will continue into the future.

Skyworth spokesperson Li Congxiang told the newspaper that the company faces high costs for energy conservation and product updates, so subsidies can reduce cost pressure for producers.

When the subsidy expires, Gree will increase the prices of its air conditioners by 6 to 10 percent, or 200 to 300 yuan, and Skyworth said it will stop production of some subsidized products, the newspaper said.

China's policies to stimulate consumption once included an old-for-new subsidy that expired in 2011 and a rural home appliance subsidy that came to an end in January 2013.

If the energy-saving subsidy ends, there will be no stimulus policies left in the sector.

When stimulus policies expire, some small companies in the sector will likely go bankrupt, Liu Buchen, an analyst with consultancy Jiachunqiu Media, told the newspaper.