CHUZHOU, CHINA — Like everybody else in his farming village, Zhan Changchun used to get around on a bicycle. This month, the 29-year-old walked into a local dealership, pulled out $7,300 in cash from his leather satchel and drove away with the family's first car: a seven-seat micro-minivan that's jointly produced by China's Wuling and General Motors.
The Zhans drained their life savings and borrowed from relatives, bold moves in a slowing economy.
But they couldn't resist a slew of government incentives: a 50% sales tax reduction, elimination of hundreds of dollars in road maintenance fees, plus the biggest of them all, a 10% rebate for rural residents buying vehicles with engines smaller than 1.3 liters.
It's all part of Beijing's "Send Automobiles to the Countryside" campaign, an effort to speed rural development and boost domestic consumption at a time when foreign demand for China's manufacturing exports is slumping. The government is also giving people in the countryside rebates for buying refrigerators and other appliances.
"Government policy is good these days," said Zhan, a big man with a round belly and cherubic face. He beamed as he showed off his gray van to visitors. The seats were still covered in plastic wrap. Red ribbons were tied around the side mirrors, good-luck symbols for a new vehicle.
"I never thought I could buy a car," he said.
That's a refrain heard in many Chinese villages these days as hundreds of thousands of farmers join the motor age. And it's a big reason China has overtaken the U.S. in car sales this year. While new-vehicle purchases in the U.S. plunged 37% in the first four months of this year, they jumped more than 9% in China, to 3.8 million, with record volumes in March and April.
China's surprisingly strong car sales have given companies like GM, which is tottering at home, a much-needed boost. It's prompted auto companies and makers of consumer goods to focus even more on China, particularly the vast, developing rural regions.
"Just imagine: If every farmer buys one cellphone, that would be 900 million units," said Zhu Xinkai, an agricultural economics specialist at Renmin University of China.
Zhu doesn't see China's rural car culture reaching full bloom for at least another decade. But the global financial crisis appears to be pushing the trend. Among those taking advantage of the car incentives are migrant workers who have returned home after losing factory jobs; they're breaking open piggy banks or borrowing to buy vehicles to launch delivery and other businesses.
