Subsidy on Air Conditioners Cool

China will from today provide a subsidy for energy efficient air conditioners of up to 850 yuan (US$125) per unit as part of its efforts to boost domestic consumption and to cut carbon dioxide pollution.

The subsidy for energy efficient products will last three years and be expanded to 10 categories, including refrigerators, flat panel televisions and electrical products, in the near future, according to a statement by the Ministry of Finance and the National Development and Reform Commission, the country's top economic planner.

The move is expected to boost consumption of 400 billion yuan to 500 billion yuan per year on air conditioner sales and also reduce carbon dioxide emissions by 75 million tons each year as it saves 75 billion kilowatt-hours of electricity, the statement said.

The government has targeted boosting domestic consumption to help the economy offset the decline in exports, Xie Zhenhua, deputy director of the NDRC, said.

Eligible air conditioners can receive a subsidy of at least 300 yuan per unit. The subsidy will be given to producers to reduce the price of the air conditioners.

Executive vice president for marketing at Suning Appliance Co, Jin Ming, said the subsidy would help energy efficient air conditioners increase market share as their price will drop.

The market share of energy saving products will increase to more than 30 percent by 2012, as much as 20 percentage points higher than the market share now, according to the NDRC.

"Air-conditioner makers are expected to get as much as 4.8 billion yuan in subsidies in 2010," Chen Weiyan, an analyst at United Securities Co, said.

"Leading players will benefit the most from it and increase their profit rate as the subsidy is given to producers directly," Chen said.