China Expands Subsidies on Household Goods to Stimulate Economy

The Chinese government has announced an expansion of its list of subsidized household goods as part of efforts to enhance domestic spending and invigorate the slowing economy.

Among the newly included items benefiting from trade-in discounts are microwave ovens, dishwashers, rice cookers, and water purifiers. These goods can offer consumers discounts of up to 20% when they trade in old appliances, encouraging more purchases.

Previously, the state-supported trade-in program already encompassed popular items such as televisions, smartphones, tablets, smartwatches, as well as electric and hybrid vehicles. The initiative is designed to uplift sales and consumer confidence amidst ongoing economic hardships.

The world's second-largest economy has been grappling with several issues, including subdued consumer demand and a deteriorating property sector. As a result, China's leaders are intensifying measures to bolster economic activity.

As part of these efforts, officials have allocated 81 billion yuan (approximately $11 billion) for the consumer goods trade-in scheme in the current year. This funding aims to spur consumer spending through attractive offers for the purchase of new appliances and vehicles.

According to China’s top economic planning body, the trade-in schemes, initiated in March, have already shown "visible effects" on market dynamics. Reports from the Ministry of Commerce indicate that such policies have successfully increased sales of larger items, especially home appliances and cars.

However, some economists express skepticism over the overall effectiveness of these initiatives. Harry Murphy Cruise, the head of China economics at Moody's Analytics, remarked, "The approach has had mixed success so far. While it has supported the sales of listed goods like cars and appliances, it hasn't significantly driven an uptick in overall consumer spending."

In the recent past, China has introduced additional strategies to support internal economic growth as challenges mount for exporters facing a tough global market. A significant meeting of the country’s leaders in December emphasized the urgency for "vigorous" actions to enhance consumer spending levels.

This need for economic stimulation became particularly pressing in light of external pressures, such as the potential for substantial tariffs on Chinese goods by the incoming U.S. administration. President-elect Donald Trump has signaled intentions to impose a 60% tariff on products made in China, which could further strain economic interactions.

As China prepares to reveal its projected economic growth figures for 2024, expectations lean toward a target of approximately 5%, as the nation seeks to navigate through existing economic hurdles.

China, economy, appliances