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Upgrading, trade-in policy bearing fruit

Measures further unleash demand for automobiles, home appliances

By ZHU WENQIAN | China Daily | Updated: 2024-09-24 07:59
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A man inspects a Honda Civic sedan at the old-for-new promotion event in Handan, Hebei province, in April. HU GAOLEI/FOR CHINA DAILY

China has issued 300 billion yuan ($42.5 billion) in treasury bonds to support equipment upgrades and trade-in deals for consumer goods, significantly boosting the growth of consumption and economic momentum, said the country's top economic regulator.

The special treasury bonds fund has been fully allocated, and the upgrading and trade-in policy has been implemented in various regions across the country, the National Development and Reform Commission said on Monday.

"The policy has effectively helped release consumption potential in the country, driving sales growth of related products such as automobiles and household appliances," said Zhao Chenxin, deputy head of the commission.

"China is a giant that consumes a large amount of durable consumer goods, with the inventory of household appliances exceeding 3 billion units and cars over 300 million units. Improving the energy efficiency level of those existing products through trade-in deals will also help reduce China's overall energy consumption and carbon emissions," Zhao said.

In August, retail sales of passenger vehicles in China reached 1.91 million units, an increase of 10.8 percent compared with July. Sales of new energy vehicles hit 1.03 million units, a 17 percent increase over July, according to the China Automobile Dealers Association.

The penetration rate of NEVs in China has exceeded 50 percent for two consecutive months, and 2 million high-emission cars are expected to be phased out by the end of the year, the NDRC said.

For consumers who scrap and replace polluting automobiles, subsidies of 20,000 yuan will be provided for the purchase of NEVs and 15,000 yuan for buying fuel-efficient passenger vehicles with displacement of 2.0 liters or below, according to the latest policy.

"With the continuous promotion of the trade-in deals, a large amount of waste materials are expected to be generated in the near future. The NDRC will work with relevant departments to accelerate the building of a waste recycling system, covering various fields," Zhao said.

Fu Yifu, a researcher at the Star Atlas Institute of Finance, said the trade-in deals are expected to boost household consumption while expanding domestic demand, and promote the upgrade of traditional industries and the high-quality growth of the economy.

"A series of such subsidy policies can help lower the consumption threshold for residents and stimulate their willingness to trade in the old products for new ones," Fu said.

He added that this will also help drive the upgrade of the whole industrial chain, from raw materials and parts to after-sale services.

The policy has also helped lift the retail sales of household appliances and audiovisual equipment. In August, sales in those categories edged up 3.4 percent year-on-year, according to the National Bureau of Statistics.

For home appliances, older ones can be exchanged for new and better ones via e-commerce platforms and brick-and-mortar stores, and sales involving trade-in deals have grown rapidly. During Mid-Autumn Festival in mid-September, the home appliance market embraced a consumption peak.

On Chinese e-commerce platform JD.com, between Aug 26 and Sept 21, the sales value of air conditioners surged 240.5 percent year-on-year, with televisions up 130.6 percent and refrigerators 128.8 percent.

JD said it is confident that the favorable policies will encourage more than 20 million consumers on its platform to participate in trade-in deals this year.

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