From CNBC: 2025-03-10 20:58:06

China’s consumer trade-in subsidy program doubles to 300 billion yuan ($41.47 billion) for select products like mid-range smartphones and home appliances. Experts believe the subsidies will boost retail sales and support China’s aggressive 5% GDP growth target while prioritizing consumption to counter deflationary pressures and stimulate domestic demand.

The Chinese government is focusing on boosting consumption as a top priority, a shift not seen in a decade. With a new round of subsidies aimed at supporting retail sales and countering deflationary pressure, China aims to stabilize real estate prices and increase domestic demand to stimulate economic growth.

China’s retail sales grew by 3.5% last year, a significant slowdown from the prior year’s 7.2% growth. As consumer price inflation falls below zero, the government plans to address depressed prices by expanding fiscal support, lifting consumption, and stabilizing real estate prices to incentivize businesses and increase consumer income.

Beijing’s latest efforts to boost consumption include a 300 billion yuan subsidy program funded by ultra-long special government bonds. With a deficit raised to 4% to pursue proactive fiscal policy, China aims to stimulate consumer spending, increase business confidence, and promote income growth to support economic recovery and stability. A recent report in China calls for efforts to boost consumer spending through product development and immersive scenarios. Policymakers focus on big-ticket items and plan to reduce restrictions on real estate and auto purchases. Plans also include increasing paid vacation days and subsidizing trade-ins and equipment upgrades.

China’s National Development and Reform Commission will release a detailed plan to boost consumption. Preliminary data shows a sales increase from initial consumption subsidies in January. Retail sales of new energy vehicles surged almost 80% in February, with smartphone sales also experiencing a significant increase, fueled by subsidies encouraging early upgrades.

Read more: China’s $41 billion plan to boost consumption is just a start