China plans to broaden its consumption subsidies to include smartphones and other electronics in a bid to boost domestic spending as external challenges loom.
The country’s trade-in program, originally focussed on home appliances and cars, will, from this year, begin to include personal devices like phones, tablets, smartwatches, etc., officials from the National Development and Reform Commission (NDRC), the nation’s top economic planning agency said in a briefing Friday.
The move aligns with the government’s 2025 priorities, which, for only the second time in over a decade, place a significant emphasis on boosting consumption and domestic demand.
Why is China offering smartphone subsidies?
A core part of the program is increasing sales of consumer electronics, a sector that has seen a slowdown as post-COVID consumers hold onto their devices longer due to lackluster product updates and tighter budgets.
The expansion is expected to rejuvenate the world’s largest smartphone market, drive up sales of brands like Huawei Technologies Co. and Xiaomi Corp., as well as boost businesses of e-commerce platforms like Alibaba Group Holding, and JD.com, which are popular among device buyers.
The move is also planned to offset effects of any new US tariffs on Chinese exports which have been a key economic driver for the country.
How will China fund the smartphone subsidies?
The government will “significantly” increase the sale of ultra-long special treasury bonds to fund the program, which also encourages companies to upgrade their equipment, according to Yuan Da, deputy secretary-general of the National Development and Reform Commission.
The central government committed 300 billion yuan ($41.1 billion) from special treasury bonds in mid-2024, supplementing efforts by local governments.
The funds have already contributed to a notable uptick in car and appliance sales since September, bolstering the broader economy.
In addition to personal electronics, the program includes subsidies for upgrading business equipment, with new provisions for agricultural facilities and other sectors.
Yuan Da indicated that specific details on the expanded program would be released soon.
How has China’s trade-in program fared?
According to a report by South China Morning Post published in October, since the trade-in program’s launch, over 8.23 million consumers have purchased 11.78 million major appliances across eight categories, generating more than 55.79 billion yuan in sales.
In the automotive sector, the Ministry of Commerce’s trade-in platform had received over 1.27 million subsidy applications as of October 7, driving new vehicle sales worth more than 160 billion yuan.
Notably, more than 60% of these applications were for new energy vehicles.
Data from the China Automobile Dealers Association further highlights robust growth, with retail passenger-vehicle sales reaching 2.1 million units in September—a 4% year-on-year increase and a 10% rise compared to the previous month.
Historical parallels and forward outlook
China’s latest stimulus mirrors a successful subsidy plan introduced in 2007 to counter the global financial crisis.
That initiative, which covered rural residents’ purchases of home appliances, cars, and computers, boosted domestic consumption until it ended in 2013.
With potential new US tariffs threatening China’s export-driven growth, the government’s focus on domestic demand reflects a proactive approach to economic resilience, signaling its commitment to sustaining consumer spending and industrial upgrades.
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