China steps up trade-in schemes to spur consumer demand

Automobiles are displayed at the World Intelligence Expo 2024 in north China's Tianjin, June 20, 2024. (Xinhua/Sun Fanyue)

BEIJING, Sept. 4 (Xinhua) -- China is stepping up measures to encourage consumer goods trade-ins, in an effort to further unleash market demand and galvanize economic growth.

On Tuesday, Shanghai unveiled a plan to promote consumer goods trade-ins, providing a 15-percent subsidy on the purchase of certain household appliances and home decors.

Under the policy, local residents will be able to enjoy subsidies of no more than 2,000 yuan (about 281.1 U.S. dollars) while purchasing sofas, mattresses, and air purifiers, among others.

Shanghai's policy epitomizes the ongoing drive to promote trade-in schemes across China. The initiative, covering automobiles, home appliances and decors, aims to encourage the replacement of outdated goods with newer and more advanced options.

In Chongqing Municipality in southwest China, local authorities have updated trade-in policies for green and smart household appliances last week. On the first day when the new policy was implemented, a total of 8.17 million yuan worth of subsidies were dished out.

A local resident surnamed Zhou was one of the beneficiaries. He received a subsidy of nearly 500 yuan while purchasing a 2,499-yuan Haier air conditioner.

It was a very attractive deal with government subsidies, Zhou said, adding that the application process was fast and convenient.

To boost car trade-ins, central China's Hubei Province has increased subsidies for automobiles, granting up to 16,000 yuan for the trade-ins of new energy vehicles (NEVs).

In the economic powerhouse of Guangdong, policymakers have set the target of passenger car replacements and renewals at 143,000 units for the whole province, excluding Shenzhen City.

These local policy measures came after China's State Council released an action plan in March to initiate large-scale equipment upgrades and trade-ins of consumer goods.

China has underscored the importance of consumption in economic growth in multiple meetings. During a tone-setting meeting on economic work in December, the country listed the lack of effective demand as one of the difficulties and challenges faced by its economic recovery and urged efforts to expand domestic demand.

Over the past few months, the action plan has been translated into concrete policy measures by relevant government departments and local governments, injecting fresh impetus into the consumer market and generating positive initial effects on the economy.

Data showed that the sales of NEVs have already been on a steady rise. According to invoice data from the State Taxation Administration, the number of NEVs sold surged 34.8 percent year on year from April to July, up 7.3 percentage points compared with March.

In particular, NEVs registered a growth of 38.5 percent year on year in sales volume in July, becoming a crucial force in stabilizing automotive consumption.

"Domestically-manufactured NEVs boast advantages in prices and cost less to use. With trade-in and favorable tax policies, many car buyers are opting to replace their old petrol vehicles with NEVs," said Wan Meibo, an employee with a Hunan-based automobile sales company.

Boosted by policy stimulus, revenues from retail sales of household appliances and audio-visual equipment also logged year-on-year increases during the April-July period, as indicated by value-added tax invoice data.

The warming household appliance and furniture market has spurred sales of related manufacturing sectors. Intelligent consumer products, such as wearables and smart auto equipment, posted an increase in sales revenues during the April-July period.

Against the backdrop of tepid global growth and insufficient domestic demand, the trade-in policies have benefited the public and stimulated consumption, experts said.

China's retail sales of consumer goods rose 3.5 percent year on year in the first seven months of this year, with July posting a faster growth rate than that of June, official data showed.

With intensified efforts to boost consumer goods trade-ins and the launch of various pro-consumption activities, China's consumer market will see an upward and positive trend in the future, according to the Ministry of Commerce.