Trade-in policy drives domestic consumption

Boosted by China's trade-in program for consumer products, the country saw strong growth in retail sales of cars, home appliances and electronic products in the first five months of this year, indicating steady growth in the overall consumption market, latest data from the Ministry of Commerce showed.

The trade-in program has driven total retail sales of consumer goods in the country to 1.1 trillion yuan ($152.8 billion) as of Saturday, the ministry said on Sunday.

China has vowed to implement solid supporting measures to boost domestic consumption. The plan outlines the issuance of ultra-long special treasury bonds totaling 300 billion yuan to bolster the consumer goods trade-in program this year, double the figure in 2024.

In the first five months of this year, around 175 million units of subsidies were distributed directly to consumers with the trade-in program, according to the ministry.

"We will continue to expand the scope of the trade-in program and organize diverse consumption promotional events," said Li Gang, director-general of the ministry's Department of Market Operation and Consumption Promotion, at an earlier news conference in Beijing.

"China's consumption market boasts strong resilience and great potential, and is full of vitality. The basic trend of recovery and improvement remains unchanged for the long term," Li said.

Over the five-month period, there were more than 4.12 million applications for car trade-in subsidies. In addition, nearly 50 million consumers purchased home appliances through trade-in activities, and they bought over 77 million units of 12 types of household appliances, the ministry said.

During the same period, more than 53 million consumers bought 56 million digital products, including mobile phones. Meanwhile, over 6.5 million electric bicycles were traded for new ones, and consumers traded over 57 million home decoration, kitchen and bathroom products for new ones, the ministry said.

Cui Dongshu, secretary-general of the China Passenger Car Association, said that the trade-in program started earlier this year, and the subsidy policy was well implemented. Different regions have introduced corresponding consumption promotional policies.

"China's automobile consumption market began to pick up in March, and the market saw a peak in customers during the May Day holiday," Cui said.

In the first four months of this year, new energy vehicles accounted for over 53 percent of the car trade-in activities in the country, according to the association.

Since the introduction of the trade-in program in early 2024, more than 120 million consumers have used the subsidies, the Commerce Ministry said.

In the Government Work Report delivered in March, boosting consumption was listed as a top priority among this year's tasks.

Denis Cheng, consumer sector leader at Ernst & Young China, said that China's overall consumption market is expected to show a stable and positive growth trend this year, supported by the government's favorable policies.

"The trade-in program has directly created benefits for consumers and enhanced their confidence and willingness to shop. For goods consumption, the trade-in program has continued to be effective, and sales of key commodities such as automobiles, home appliances and home furnishings are improving," Cheng said.

He added that further efforts have been made to expand the scope of the program, and it is expected to promote sustained release of the consumption potential of durable goods.

Xu Dongsheng, deputy president of China Household Electrical Appliances Association, said the introduction of the trade-in policy will continue to encourage consumers to upgrade their home appliances to smarter ones and help drive industrial upgrading.

Lily Chen, a 35-year-old office worker in Beijing, recently bought a new washing machine and enjoyed a discount of about 2,000 yuan with national subsidies. Benefiting from the trade-in policy, she also got 50 yuan for exchanging the old one, and the retailer took away the old machine.

zhuwenqian@chinadaily.com.cn