China’s durable goods trade-in program gains traction – a move to stimulate domestic consumption

China's national program to promote trade-ins of durable consumer goods has achieved marked progress, as the efforts by local governments to propel domestic consumption bears fruit, officials said on Wednesday.

Taking automobiles for instance, a total of 1.13 million applications for trade-in subsidies eligible for the customers who scrap old cars and buy new ones have been submitted by Wednesday, while the number of registered customers has exceeded 1.68 million, said Geng Hongzhou, an official from the Ministry of Commerce.

Amid the annual consumption peak season of the so-called "Golden September and Silver October," Geng said that the trade-in program will further spur auto consumption and promote the growth of adjacent sectors.

In addition to auto vehicles, consumer spending on home appliances, furniture, and sanitation products also saw a noticeable rise, said Wen Hua, an official from the National Development and Reform Commission (NDRC).

In August, retail sales of household electrical appliances as well as audio-visual equipment reversed a decline in the previous year to a rise, with the month's sales up 3.4 percent year-on-year, Wen noted.

The trade-in program has also driven up investment in the targeted sectors. The output of home appliances covered under the program including washing machines grew by 7 percent, while the production of smart televisions and refrigerators increased by 6.7 percent and 4.7 percent, respectively, Wen said.

Wen added that the ultra-long special treasury bonds worth 150 billion yuan ($21.36 billion) dedicated to trade-ins of consumer goods were issued to Chinese localities at the beginning of August.

In terms of the strengthened financial support by various Chinese localities, Wen said that 24 Chinese provinces and cities including Southwest China's Chongqing Municipality, Beijing, Tianjin, Shanghai, and East China's Jiangsu Province have introduced policy measures to support the replacement of old cars with new ones, with the maximum subsidy reaching 18,000 yuan.

While China's domestic consumption is undergoing structural changes, the government's trade-in program will continue to drive consumption of durable goods in the remaining months of 2024, Cong Yi, a professor at the Tianjin School of Administration, told the Global Times.

Cong said that he is optimistic about China's consumption potential, expecting the trade-in program to accelerate retail sales.

Included in the government's trade-in program are products ranging from automobiles to home appliances and electric bicycles.