Trade-in policy stimulating consumption

BEIJING — In a significant push to stimulate consumer spending, China has rolled out an expansive trade-in policy across multiple sectors.

From automobiles and home appliances to real estate, the initiative aims to encourage the replacement of outdated goods with newer and more advanced options.

Experts believe that trade-in programs for consumer goods are more than just product replacement, and represent upgrades as well as quality improvements. Such programs not only bring higher-quality products, but also stimulate consumer demand, energizing domestic consumption and reinforcing economic recovery. For businesses and industries, this presents a significant opportunity for growth.

Automobiles

Wu Qiang of Jiangsu province recently received a 20,000 yuan ($2,803) subsidy to trade in his 16-year-old fuel vehicle for an electric vehicle.

Initially, he considered selling his old car to a dealership for just 4,000 yuan. While he was weighing his options, China issued a new circular that increased financial incentives to encourage consumers to scrap their old vehicles to buy new ones.

According to the circular, subsidies for trade-ins of new-energy passenger vehicles have doubled from 10,000 yuan — a figure stipulated in an April document — to 20,000 yuan. Subsidies for trade-ins of fuel passenger vehicles have also risen from 7,000 yuan to 15,000 yuan.

Encouraged by the latest policy, Wu quickly decided to scrap his old car and purchased a new Mercedes-Benz Smart EV, then applied for the subsidy.

Dealerships are also seeing the opportunities. For instance, Jiang, a car salesperson working at a shopping mall in Beijing's Chaoyang district, said that many customers are now upgrading their vehicles, with the trade-in program offering significant financial incentives.

Automakers like FAW-Volkswagen and BAIC are also participating, offering up to 60,000 yuan in trade-in subsidies.

Home appliances

In the home appliance sector, the trade-in program has also been well-received.

Zhang Haibo, a sales supervisor at Suning, a major home-appliance retailer in China, said many customers are attracted by the trade-in program, combined with government subsidies, store discounts and brand promotions.

Suning's data reveal that nearly 40 percent of its consumers have chosen to purchase new home appliances through trade-in programs this year, including air conditioners, washing machines and large-screen TVs.

Wu Sa from the Chinese Academy of Macroeconomic Research pointed out that China, with its large population, has a vast market for durable goods, representing significant potential for the replacement market. The expected market space for replacing old automobiles and home appliances is expected to exceed 1 trillion yuan.

Housing

The housing sector has also embraced trade-ins, with over 100 cities encouraging homeowners to swap old properties for new ones with an additional payment. This scheme has been taken a step further in the Yangtze River Delta region, where intercity housing trade-ins are now available for the first time.

Under this new scheme, homeowners can trade in pre-owned residential properties, not just within Wuxi, Jiangsu, but also in the neighboring cities of Suzhou and Changzhou in the same province, for new homes in Liangxi district of Wuxi.

Xinhua