China’s Commerce Ministry Calls for Enhancing Adequacy of Trade-in Program Funds to Spur Domestic Consumption

The Trade-In Program: A Catalyst for Consumption

China’s commerce ministry has issued a call to provincial governments, urging them to enhance the adequacy of subsidies for trade-in programs. This move is part of a broader strategy to spur domestic consumption during the Spring Festival holiday.

Achieving Substantial Growth in Sales

The initiative aims to ensure that consumers can apply for subsidies for home appliance and digital product trade-ins through offline channels, as well as receive automobile trade-in subsidies. According to data from MOFCOM, sales of home appliances and digital products under the subsidy program exceeded 15 million units in January, generating nearly 60 billion yuan in revenue.

Consumer Demand on the Rise

A retail store manager surnamed Wang in Beijing’s Chaoyang District reported a rise in consumer inquiries about trading in home appliances like televisions and fridges. With national trade-in subsidies and consumption vouchers, he noted that a refrigerator priced at around 14,000 yuan ($2,028) can now be purchased for just over 8,000 yuan.

Boosting Retail Sales and Related Industries

The subsidy program has not only boosted retail sales but also supported other related sectors such as dining and entertainment by drawing shoppers back to brick-and-mortar stores. This reflects the great potential of China’s domestic market and suggests that consumption will play an increasingly important role in driving economic growth.

Expert Perspective

Cao Heping, an economist at Peking University, emphasized that domestic demand has become a key focus for international observers of China’s economy. He highlighted the significant contribution rate of final consumption expenditure to economic growth, which reached 52 percent last year, up 5 percentage points from the previous year.

Looking ahead, multiple favorable factors are expected to continue supporting steady consumption growth despite ongoing pressures and challenges. These include enormous potential in consumption upgrading, continuous effectiveness of pro-consumption policies, and ongoing improvements in the consumer environment.