BEIJING, Sept. 9, 2024 – Chinais stepping up its efforts to stimulate consumer spending by expanding and enhancing its trade-in programs for consumer goods. This initiative aims to encourage consumers to upgrade their existingproducts, thereby driving economic growth and promoting sustainable development.
The move follows the announcement in July by the National Development and Reform Commission and the Ministry of Finance to allocateapproximately 300 billion yuan (approximately $41 billion) in ultra-long-term special bonds, with 150 billion yuan earmarked for local governments to implement trade-in programs for consumer goods.
Severalprovinces and cities across China have already begun implementing concrete measures to leverage these funds. Notably, Shenzhen and Shanghai have unveiled comprehensive plans to incentivize consumers to trade in their old products for newer, more advanced ones.
Shenzhen’s plan, released on Sept. 5, significantly increases the subsidy for car scrapping and renewal, raising the maximum subsidy from 10,000 yuan to 20,000 yuan. The city has also expanded the scope of eligible products, adding consumer-grade drones, robots, and coffee machinesto the list of subsidized items.
Shanghai’s plan focuses on promoting the purchase of electric bicycles, offering a 500 yuan subsidy for consumers who trade in their old bikes. Additionally, the city is providing a 15% subsidy on the purchase of sofas, robot vacuums, and other home appliances,furniture, and home improvement products, including those designed for elderly care.
Experts believe that these initiatives hold significant potential to boost both short-term and long-term economic growth.
The nationwide push for ‘trade-in’ programs is a strategic move to stimulate consumption and accelerate economic circulation, said Zhu Keli,a senior researcher at the China Information Association and founder of the National Research Institute for New Economy. By directly reducing consumer costs and encouraging upgrades, these programs enhance purchasing power and drive consumer demand.
Furthermore, the targeted subsidies are designed to guide consumers towards more environmentally friendly, energy-efficient, and intelligent products, fostering a shift towardssustainable consumption patterns and promoting industrial upgrading.
These policies not only benefit consumers but also incentivize companies to innovate and develop new products, said Bai Wenxi, chief economist at the China Enterprise Capital Alliance. The ‘trade-in’ programs encourage companies to prioritize product research and development, leading to higher product quality andvalue.
The expanded trade-in programs also contribute to resource recycling and environmental protection by promoting the proper collection and disposal of old products, minimizing their environmental impact.
The focus on electric vehicles in Shanghai and the inclusion of drones and robots in Shenzhen demonstrate a keen understanding of consumer preferences and market trends,added Zhu. These initiatives are poised to stimulate the growth of emerging industries and drive technological innovation.
Experts predict that the nationwide implementation of these programs will have a positive impact on both consumption and economic growth. In the short term, the programs are expected to boost consumer spending and stimulate economic activity. In the long term, they will contribute to the development of a more sustainable and innovative consumer market.
As China continues to prioritize sustainable development and economic growth, the expansion of trade-in programs for consumer goods is expected to play a crucial role in shaping the future of the country’s consumption landscape.
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