China's economy is betting on a unique approach—making consumers give up old for new at some discounts.
So far, the Chinese government added microwave ovens, dishwashers, rice cookers, and water purifiers to this list of accepted trade-ins to boost household spending. In return, Chinese consumers can be rewarded with cuts of as high as 20% on appliances, making these upgrades financially accessible.
The trade-in program, covering all electronics along with electric and hybrid cars, is going to revive the consumers' spending behavior, per BBC. Part of China's economic struggles is a result of low consumer expenditure and a worsening real estate market. The country has dedicated 81 billion yuan (approximately $11 billion) to the scheme of consumer goods trade-in during 2024 alone.
Ministry of Commerce further explained that the trade-in policy has been beneficial for sales, especially for high-value items like home appliances and cars.
Economists Skeptic on China's Economic Revival Strategy
However, not a lot of economists are positive about the plan, worrying about the long-term effects of these policies. While the program has created interest in certain product categories, such as appliances and vehicles, critics say it may not be enough to generate demand for consumer spending across the economy.
According to JagoNews 24, Dan Wang, one economist, said that consumers would not respond by spending more because of this policy, while Harry Murphy Cruise of Moody's Analytics said the scheme might not be effective in boosting spending on enough products to create a general increase in the level of spending.
The trade-in program is merely part of what the Chinese government has planned to enhance domestic demand, especially as global factors like the trade tensions between China and the US have mounted pressure on China's economic leaders to boost consumer spending.
The country is preparing to announce its economic growth figures for 2024, and Beijing has set a modest growth target of 5%.
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