'Trade-in' for new space for consumption and development in China

Editor's note: Song Yuan is a researcher at the School of Economics at Zhejiang University. The article reflects the author's opinions and not necessarily the views of CGTN.

Since March this year, the Chinese government has launched a series of large-scale consumer goods trade-in policies to expand consumption and boost domestic demand. The trade-in program provides financial subsidies to drive the consumption of automobiles, home appliances, and housing renovations, as well as encouraging the recycling of used products. Compared with previous policies to promote consumption, this year's policies are broader in scope, stronger in intensity and more focused on green consumption. The policy provides new impetus to guide the consumption of China's residents, promotes industrial upgrading, fosters green development and enhances the high-quality development of the economy.

Consumer spending has been significantly stimulated by the trade-in policy, bringing brand-new opportunities for the automobile and home appliance industries. Latest government data shows that from April to July, the sales of new energy vehicles increased by 34.8% year-on-year, an increase of 7.3 percentage points compared with March, and the sales of used vehicles increased by 7.2%. Revenue from sales of household appliances such as refrigerators and televisions rose 4.4% and 3.5% year-on-year, an increase of 4.8 and 10.1 percentage points from March, respectively. Furniture and sanitary ware retail sales revenue rose 9.9% and 14.3% year-on-year, with growth rates 9.3 and 24.9 percentage points higher than in March. The trade-in program is estimated to directly expand the consumer market by one trillion RMB, significantly boosting domestic demand and promoting the development of related industries.

The trade-in policy is a direct response to the demand for upgrade consumption, meanwhile bearing witness to a profound change in consumer attitudes. The current consumption promotion policy places greater emphasis on greenness, intelligence and high-endization to meet the needs of residents' consumption goals. For example, the new round of trade-in programs subsidizes green and energy-saving home appliances at a rate of 5% higher than general home appliances, reaching 20%. It also pays more attention to subsidies for new energy vehicles and low-emission fuel passenger cars.  From April to July, the sales revenue of wearable smart devices and smart vehicle equipment increased by 35.2% and 3.4% year-on-year, respectively.

Consumers' higher demand for products has driven innovation and prompted enterprises to develop in the direction of green and intelligent production. It leads enterprises to develop new products, advances scientific and technological innovation, facilitates the integration of the consumer goods manufacturing industry with the digital economy, and improves their international competitiveness. From April to July, furniture and electrical equipment manufacturers purchased 32.4% and 66.7% more smart equipment year-on-year, and enterprises continue to launch new products to meet the ever-changing needs of consumers. Meanwhile, during the replacement process, enterprises are also investing in the future recycling and disposal of their products, spurring further innovation in materials and production methodologies.

The trade-in policy also plays a pivotal role in the development of both circular and green economies, providing new impetus for high-quality economic development. The new trade-in program strongly encourages and supports the recycling of used automobiles, home appliances and other products, further improving the complete industrial chain from production to consumption to recycling and promoting the development of a circular economy. From January to July, the automobile recycling volume was 3.5 million units, an increase of 37.4% year-on-year. It is expected that this year's automobile recycling will reach more than 7 million units, with the recycling and dismantling industry set to reach a market scale of 100 billion yuan, and the number of related enterprises also expected to witness an increase.

Overall, the steady progress of the trade-in policy has significantly expanded consumption and domestic demand, aligning with the trend of higher-end, environmentally friendly, and personalized demand. This policy has not only promoted corporate innovation and industrial upgrading, but also the move towards a more circular economy. It has played a crucial role in the overall green transformation of the economy and the high-quality development of the economy, instilling a sense of optimism for the future.