Premier Wen Jiabao has urged Chinese companies to stress innovation to combat the impact of global economic turmoil.

Wen made the remarks as he visited companies, markets, communities and rural areas in east China's Shandong Province over the first two days of 2009. He sought to reassure people that the economy would be able to regain steam.

"Try to develop new types of candles to cater to different cultures, which would capture big market share," Wen said during a visit to Qingdao Kingking Group, the world's second-largest candle maker.

During a visit to Haier, the country's largest appliance maker, the premier praised its sales promotion and services in rural areas as a factor stimulating rural consumption, which he said would help ease the impact of the global financial crisis.

China kicked off a subsidized household appliance program in December 2007 and decided on Wednesday to further expand subsidies for farmers' purchases from Feb. 1 to boost consumption.

"How Haier is dealing with the global crisis tells us there is opportunity amid crisis, and the opportunity lies in innovation, which will not only help shake off the impact of the crisis but also upgrade enterprises," Wen noted.

He said the country would increase subsidies to 15 billion yuan (US$2.2 billion) in 2009 from last year's 9 billion yuan. It would increase domestic spending by more than 100 billion yuan.

The policy would remain in force for at least five years, which would increase appliance sales by more than 500 million yuan, Wen added.

He highlighted the importance of innovation and called for enterprises to design and develop high-quality, low-cost products for rural markets.

Wen also went to a village in Shandong Province to talk with rural families. He reassured villagers that apart from the expanded subsidies, the government also encouraged enterprises to purchase old appliances and allow farmers to trade in older models for new ones as a move to sustain domestic demand.

The premier reiterated "confidence" wherever he went, saying a solid material foundation, stable financial system, abundant cash flow, large domestic markets, appropriate macroeconomic policies and others steps boosted confidence.

Wen said the State Council, or Cabinet, is drawing up two major plans.

One involves 10 programs to expand demand, further detailing and specifying the 10 stimulus measures kicked out last year.

The other includes the readjustment and improvement of 10 pillar industries. Plans for the development of steel industry and automobile industry have been rolled out and others are under way.

(Xinhua News Agency January 3, 2009)