Energy-saving appliance subsidy ends

The government on Wednesday announced the expiration of a one-year program offering subsidies to buyers of ­energy-efficient home appliances, which industry analysts said has interfered with the market-based mechanism.

The subsidy program offered subsidies ranging from 100 yuan ($16.18) to 400 yuan for air conditioners, flat-panel televisions, refrigerators, washing machines and water heaters that meet certain energy-saving requirements. It is set to expire Saturday, according to an announcement jointly released by the Ministry of Finance, the National Development and Reform Commission, and the Ministry of Industry and Information Technology (MIIT).

The program, launched on June 1, 2012, was designed to boost domestic demand, spur green consumption and drive energy conservation and emissions reduction, according to the announcement, which noted that the share of ­energy-saving appliances in the home appliance sector has risen substantially since the program was put into place, largely meeting the program's goals.

The announcement did not reveal how many energy-saving home appliances had been sold under the program.

"It wouldn't make sense for the government to renew the subsidy program, as the nation's home appliance industry should have been consolidated further amid rising competition, but the government intervention in the form of subsidies helped prolong the lives of some ill-performing firms in the field, interfering with the market-based mechanism," Liu Bucheng, a Zhengzhou-based independent industry analyst, told the Global Times Wednesday.

Subsidies financed from the central government coffer are supposed to go first to home appliance manufacturers, which then pass on the money to consumers who opt for the energy-saving items.

Less popular brands, which have benefited a lot from the program, are especially likely to suffer from its expiration, as government subsidies are shown to account for a significant portion of their income, according to Liu.

Instead of introducing subsidy policies to boost the popularity of energy-saving home appliances, the government should enforce stricter efficiency requirements to raise the bar to entry for a more sustainable development of the industry, Hong Shibin, deputy director of the sales service department at the China Household Electrical Appliances Association, told the Global Times Wednesday.

Desktop computers, which were added to the list of subsidized home appliances staring October 1, 2012, are also expected to see the subsidy expire at the end of October.

No information is yet available as to whether the subsidy will be renewed.

But it seems the government is likely to continue its reliance on such programs to spur the use of energy-saving home appliances, despite allowing the subsidies to expire on the five major types of home appliances mentioned above.

The government might add laptops, photocopy machines and printers to the list of subsidized energy-saving items, the Beijing News reported on May 22, citing Su Bo, vice minister of the MIIT.