BEIJING:
China has added more home appliances to the list of products eligible for its consumer trade program and will offer subsidies for additional digital goods this year in a bid to revive demand in the sluggish home sector.
Microwave ovens, water purifiers, dishwashers and rice cookers will be included in the household appliance trade program this year, according to a document issued by the state’s top planner and the finance ministry on Wednesday. Mobile phones, tablet computers, smart watches and bracelets under 6,000 yuan could receive 15% subsidies.
The statement did not specify the total cost of the stimulus, but a finance ministry official said at a press conference on Wednesday that the government has so far allocated 81 billion yuan ($11.05 billion) for consumer goods transactions to support consumption in 2025. The new measures are part of a wider plan to boost growth in the world’s second-largest economy in 2025, where a severe property crisis it has eroded consumer wealth and hurt household spending.
China’s struggling consumer sector has been a particular sore point for the economy, with analysts and policy advisers calling for urgent measures to revive household spending. “We expect total subsidies to double in size to 300 billion yuan in 2025. This somewhat signals a policy shift towards more consumption,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
But the more limited subsidies for phones and tablets, at less than 500 yuan per item, suggest Beijing does not intend to subsidize the wealthy for big-ticket spending, he added. China last year distributed about 150 billion yuan from a 1 trillion yuan special government bond issue to subsidize replacements of old appliances, cars, bicycles and other goods.
Officials said the campaign had “achieved positive results”.
The campaign has resulted in 920 billion yuan in car sales and 240 billion yuan in home appliance sales by 2024, Li Gang, a commerce ministry official, said at the same press conference.
But investors found little cheer in Wednesday’s announcements, with China’s consumer electronics index down 3.2 percent by midday.
A state planning official said last week that China will sharply increase funding from ultra-long government bonds in 2025 to boost equipment upgrades and its consumer goods trade plan. Last year, China allocated a total of 300 billion yuan to these initiatives.
Zhao Chenxin, vice chairman of the National Development and Reform Commission (NDRC) – the state planner – said on Wednesday funding figures for the programs would be released during the annual parliamentary session in March.
High-end, smart and green
Top Chinese leaders have pledged to “vigorously” boost consumption and expand domestic demand “in all directions” this year.
Reuters reported last week that millions of government workers across China received pay rises as part of efforts to boost consumption.
“We expect more supportive policy as well as a more supportive base effect to help pick up retail sales growth in 2025 compared to 2024,” said Lynn Song, Chief Economist of Greater China at ING.
“The recovery in household consumption will depend on stabilizing asset prices as well as improving confidence in the employment outlook.”
According to the policy paper, China will also raise funds from its ultra-long special government bond issue to support equipment upgrades in key sectors.
Equipment used in the IT and agriculture sectors will now be included in the campaign, with coverage focusing on high-tech, smart and green equipment. Based on the 1.5 percentage point subsidy on interest rates for equipment upgrade loans received from banks, the NDRC said it will also arrange funds from government bonds to further lower business financing costs.
The central bank has arranged a 400 billion yuan low-cost refinancing facility to support equipment upgrades. Song also said the paper suggested that high-tech industrial sectors as well as transportation equipment manufacturing are likely to benefit, helping these sectors build on last year’s solid momentum.
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