In brief
China is implementing measures to bolster weak consumer demand by expanding its trade-in initiatives to kitchen appliances and other major goods.
In a bid to rejuvenate its sluggish economy, China has initiated new trade-in schemes aimed at encouraging consumer spending. The government has broadened the list of eligible products for trade-ins, allowing citizens to receive discounts of up to 20% on essential kitchen appliances, including microwave ovens and dishwashers, as well as water purifiers and rice cookers. These initiatives, which began in March, extend the existing program that already covered electronics like televisions and smartphones, as well as electric and hybrid vehicles. The country's consumer goods scheme has been allocated a substantial budget of 81 billion yuan (£8.9 billion; $11 billion) for the current year. Officials from China's economic planning body have reported "visible effects" attributed to these schemes, with spikes in sales for major ticket items such as home appliances and automobiles noted by the Ministry of Commerce. However, skepticism remains among economists regarding the long-term effectiveness of these measures in revitalizing overall consumer demand. Dan Wang, a China-based economist, emphasized that this initiative alone is insufficient to stimulate a substantial increase in consumption. Similarly, Harry Murphy Cruise from Moody’s Analytics raised concerns, stating that while there is evidence of improved sales for selected items, a broader uptick in consumer spending is yet to materialize. Such measures come at a crucial time as challenges mount for Chinese exporters, amidst international pressures, including looming threats of steep tariffs from incoming U.S. President Donald Trump. Following a pivotal meeting among Chinese leaders in December, there is a heightened focus on invigorating domestic consumption, with anticipated economic growth figures for 2024 expected to hover around 5%.
