China Amplifies Trade-In Initiatives to Revive Domestic Economy

Facing economic pressures, China's government has broadened its product trade-in initiatives to stimulate consumer spending, including new appliances, while skeptics question the overall effectiveness of the measures.

China has intensified efforts to rejuvenate its struggling economy by expanding a trade-in program aimed at encouraging consumer spending. Recently, the Chinese government has added kitchen appliances such as microwave ovens, dishwashers, rice cookers, and water purifiers to an existing initiative that provides discounts of up to 20% for consumers trading in old products. This is part of a larger strategy that already includes electronics like televisions, phones, and electric vehicles.

The world's second-largest economy has been grappling with several financial difficulties, primarily stemming from faltering consumer confidence and a persistent property sector crisis. In a bid to address these issues, officials announced that 81 billion yuan (approximately £8.9 billion, or $11 billion) are allocated this year for the trade-in scheme, which was first launched in March and has reportedly started to create "visible effects" as per the country’s economic planning body.

Despite some positive outcomes in the sales of large products like appliances and cars, economists remain skeptical about the long-term impact of these measures. Harry Murphy Cruise, the head of China economics at Moody's Analytics, highlighted that while the initiative has boosted sales of specific goods, it has not resulted in a substantial increase in overall consumer spending.

In light of these developments, China’s leadership recently emphasized the necessity for vigorous policies to enhance consumer expenditure. This renewed focus comes at a time when Chinese exporters encounter mounting obstacles, exacerbated by threats from President-elect Donald Trump, who has indicated plans to impose significant tariffs on goods from China. Looking ahead, China is poised to release its 2024 economic growth figures soon, with expectations set around 5%.