The Chinese government said on Monday that it will build more rural chain stores in the next few years to create a network to cover all of the nation's counties and the majority of its villages.

The move is expected to help promote the country's five-year strategy to boost domestic consumption.

"By the end of the 12th Five-Year Plan (2011-2015), all the counties and 90 percent of administrative villages will have rural chain stores," said Chang Xiaochun, director of the department of market system development under the Ministry of Commerce.

"The government will inject more funds into the project in the next five years to realize the goal," said Chang, without elaborating.

The ministry launched the rural chain store project in 2005 to encourage consumption in remote rural areas.

By the end of this year, the authorities will have spent a total of 4.3 billion yuan (US$646 million) to build a network of 520,000 rural chain stores located in 80 percent of counties and 65 percent of villages, said the ministry.

And such a network could generate "sales of more than 200 billion yuan this year", said Chang.

A rural chain store usually has a floor area of 60 to 70 square meters, and the selection of on-shelf goods is often far less than in a common superstore.

The rural chain store project "is playing a core role during the process of the nation's economic structural transformation," said Fang Aiqing, assistant minister of commerce.

China has been attaching more importance to expanding domestic consumption in a bid to help maintain its fast economic growth in the wake of the global financial crisis, rather than relying on exports and investment.

"Domestic consumption will be given top priority in the next one or even two decades, and the potential of rural consumption will have to be fully tapped," Fang said.

During the Fifth Plenary Session of the 17th Central Committee of the Communist Party of China held earlier this month, the authorities launched the 12th Five-Year Plan, in which rapid increases in the incomes of urban and rural residents are a priority.

According to the National Bureau of Statistics, during the first three quarters of this year, the average annual income of the country's rural residents grew 13.1 percent to 4,869 yuan, 2.6 percentage points higher than the growth for urban residents during the same period.

"As rural incomes continuously rise because of the plan, and as the network grows, sales from the rural chain stores will increase rapidly," said Chang.

China's export growth slowed for five consecutive months ending September. The US Federal Reserve said recently that the US economic recovery will be slow, and the nation will be challenged by high unemployment and the risk of deflation. Meanwhile, in the European Union, many nations are still struggling with debt.

"The export-driven model will have to be changed into one that is led by domestic consumption," said Fang.

Both international and domestic companies said they are excited about China's commitment to further promoting the rural chain store project.

The Chinese government has signed cooperative agreements during the past few years with a batch of companies including the global consumer product provider P&G, China's leading dairy producer Yili Industrial Group and the nation's largest juice maker Huiyuan Juice Group.

Charles Zhang, a spokesman for P&G China, told China Daily that the project is a "win-win strategy for both companies and rural consumers".

P&G said recently it aimed to add another 1 billion consumers worldwide in the next 10 years, and China, especially its rural consumers, will be "a big contributor" to this.

(China Daily October 26, 2010)