China will build a national rural retail network within five years, an official from Minister of Commerce (MOC) said in Beijing on?Friday.

Xu Ming, deputy director of MOC market system development department, said China will develop chain supermarkets and express stores in counties and major towns, and transform country fairs to chain stores. The government also encourages retailers to update rural grocery stores into distribution outlets or franchisers.

Despite amounting to more than 70 percent of the country's population, Chinese rural population have a disproportionate consumption capacity.

According to the National Bureau of Statistics, in the first quarter of 2004, consumption by the citizens of rural China fell to 34 percent of the national total, a record low since 1990s. It is believed that the shrinking rural consumption results from the low income of peasants and inefficient distribution network.

There are only 1.6 country markets for every 60,000 peasants. These rudimentary open-air fairs are filled with fake commodities and illegal dealings due to lack of quality surveillance equipment and regulations. Registration fee, commissions and taxes raised dealing cost and therefore discouragepeasants from entry.

According to Xu, the government will encourage businesses to develop cheap but durable products tailored to rural demands. It will further improve infrastructures in rural areas, including transportation, electricity, communication and drinking water.

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(Xinhua News Agency July 24, 2004)