Boosting Domestic Demand: Enhanced Trade-In Policies

Recently, with the funds from the ultra-long-term special government bonds gradually being allocated, the policy of trading in old consumer goods for new ones in many places continues to be intensified, and consumer momentum is expected to be activated on a larger scale. Experts have indicated that as the policy measures for trading in old goods for new ones continue to be strengthened, their effects will gradually become apparent. In the next phase, it is essential to ensure the implementation of these policies to further enhance residents' willingness to consume and support the continuous recovery and upward trend of the economy.

Policies Continue to Gain Momentum

Recently, the policy of trading in old consumer goods for new ones in many places has seen a new round of intensification, characterized by greater intensity and a broader scope.

In terms of specific measures, this round of policy intensification has provided clearer regulations regarding the scope of subsidies and the categories of goods eligible for subsidy activities. For instance, Anhui Province has introduced a subsidy policy for the trade-in of old electric bicycles, offering a maximum subsidy of 600 yuan for individual consumers who trade in old electric bicycles for new ones. In addition to detailing the products in the eight home appliance subsidy categories specified by the state, subsidies for purchasing new products are provided for twelve categories of home decoration and kitchen and bathroom consumer goods, such as water purifiers, dishwashers, and sweeping robots. Heilongjiang Province offers subsidies for individual consumers trading in old electric bicycles for new ones, with the subsidy standard being 20% of the final sales price of the product, allowing each consumer to enjoy the subsidy once, with a maximum subsidy amount not exceeding 500 yuan.

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At the same time, many places have increased the subsidy ratio and added more subsidy funds. Anhui Province stated that the subsidy for individual consumers purchasing new energy passenger cars has been increased from 10,000 yuan to 20,000 yuan, and the support for the consumption of home appliances and home decoration kitchen and bathroom products has been increased, with a 20% subsidy on the sales price for purchasing products with a first-level energy efficiency rating. Zhengzhou City in Henan Province stated that in terms of car scrapping and renewal, according to the principle of fully compensating, the maximum subsidy for eligible scrapped cars is 20,000 yuan; in terms of home appliance subsidies, each person can enjoy a maximum of eight times the total subsidy of 16,000 yuan. In terms of carrying out car replacement and renewal subsidies, Heilongjiang Province stated that for individual consumers who replace and purchase new vehicles as new energy passenger cars, a subsidy of 18,000 yuan is provided for eligible conditions; for those who replace and purchase new vehicles as fuel passenger cars, a subsidy of 13,000 yuan is provided for eligible conditions.

The Department of Commerce of Anhui Province stated that Anhui Province has issued four implementation details this time, combining the ultra-long-term special government bond funds directly allocated by the state with provincial supporting funds, and arranging more than 3.6 billion yuan in a unified manner, which is higher than the scale of consumer promotion policy funds arranged in previous years in Anhui Province, ensuring that more consumers benefit.

The Effect of Promoting Consumption Gradually Becomes Apparent

The continuous intensification of the policy of trading in old consumer goods for new ones has brought benefits to consumers.

"Taking advantage of the Mid-Autumn Festival holiday to visit the mall and buy some new home appliances for the home, the old refrigerator is too noisy." During the Mid-Autumn Festival holiday this year, Mr. Lin and his family came to the Fuzhou Suning Plaza store to shop. The store manager introduced that for the refrigerator purchased by Mr. Lin, Suning and the manufacturer jointly subsidized 2,429.99 yuan, plus the 1,493.80 yuan home appliance government subsidy in Fujian Province, a total of 3,923.79 yuan was discounted, and Mr. Lin got the refrigerator worth 9,899 yuan for 5,975.21 yuan.

During the Mid-Autumn Festival holiday, the home appliance market ushered in a small peak of "new consumption" replacement. Suning.com data shows that during the Mid-Autumn Festival holiday, the national store passenger flow increased by 244%, the sales of trading in old goods for new ones increased by 148%, and the order volume of packaged purchases increased by 298% year-on-year.The effectiveness of the consumer goods trade-in policy is reflected in a broader range of data. "Driven by multiple factors such as national encouragement, local support, and corporate concessions, value-added tax invoice data shows that consumer demand for automobiles and home appliances is gradually being released," said Dai Shiyou, Director of the Policy and Law Department of the State Taxation Administration, on September 20th.

Dai Shiyou stated that there is a significant increase in the sales of new energy vehicles, and the sales of used cars are accelerating. From April to August, the sales volume of new energy vehicles increased by 38.4% year-on-year, with the growth rate increasing by 10.9 percentage points compared to March; the sales volume of used cars increased by 6.2% year-on-year, with the growth rate increasing by 10.8 percentage points compared to March. At the same time, the sales of home appliance products have improved. From April to August, the retail sales of daily home appliances such as refrigerators and home audio-visual equipment such as televisions increased by 2.4% and 5% year-on-year, respectively, with the growth rate increasing by 2.8 and 11.6 percentage points compared to March.

Luo Zhiheng, Chief Economist and Dean of Research Institute at Yuekai Securities, said that under the promotion of the consumer goods trade-in policy, some durable goods consumption has shown a trend of recovery.

There is a large market potential.

Wu Sa, Deputy Director of the Economic Research Institute of the China Macroeconomic Research Institute, said that as a populous country, China's market scale for durable consumer goods such as automobiles and home appliances is large, containing huge market potential, and there is much to be done in the trade-in of consumer goods.

Wang Qing, Deputy Director of the Market Economy Research Institute of the Development Research Center of the State Council, said that actively promoting the trade-in of consumer goods to form a new product and new consumption scale effect will play a leading and supportive role in industrial upgrading and green development. It is conducive to guiding and supporting enterprises to increase the intensity of scientific and technological innovation and new product research and development, promoting the technological upgrading of related industries, promoting the continuous increase in the proportion of advanced production capacity, and helping to cultivate and develop new quality productive forces.

In Wu Sa's view, the continuous strengthening of relevant policies indicates that the policy direction is correct and the measures are effective, and greater effects can be obtained through strengthening. In the second half of the year, relevant policies will continue to be strengthened.

"Looking at the next stage, the central government has repeatedly emphasized the need to focus on boosting consumption and expanding domestic demand. The intensity of relevant policies is continuously increasing, and more places are actively strengthening the implementation of consumer goods trade-in," said Liu Aihua, spokesperson for the National Bureau of Statistics. Under the influence of a series of policies to expand domestic demand and promote consumption, the quality and level of goods and services supply continue to improve, consumption policies are continuously improved and optimized, new consumption and service consumption are accelerating, all of which are conducive to the rapid release of consumption demand potential, and the foundation for consumption recovery will be further consolidated.