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China’s initiative to boost consumption through trade-ins has not yielded significant results, according to feedback from various businesses. In July, China announced the allocation of 300 billion yuan in ultra-long special government bonds to enhance its existing trade-in and equipment upgrade policy aimed at stimulating consumption. Half of this funding is designated for subsidizing trade-ins of vehicles, home appliances, and other high-value consumer goods, with the remainder supporting upgrades for large equipment such as elevators. Despite the targeted efforts to stimulate consumption, businesses have not seen tangible incentives materialize on the ground in China since the implementation of these measures.

The central government’s budgeted amount for the policy translates to approximately 210 yuan per capita, with the effectiveness of this scheme in significantly boosting domestic consumption being questioned by analysts. UBS Investment Bank Chief China Economist Tao Wang has suggested that the new trade-in program could potentially support around 0.3% of retail sales in 2023. Retail sales data for August is set to be released soon, following modest growth in June and July. While overall retail sales have seen some improvement, new energy vehicle sales in particular have surged despite a decline in overall passenger car sales.

China had previously rolled out policies in support of equipment upgrades and consumer product trade-ins, with a focus on modernizing outdated elevators. However, major foreign elevator companies have yet to witness specific new orders under the revamped program for equipment upgrades. The potential impact of the trade-in policy on retail sales remains uncertain, with businesses cautiously optimistic about the opportunities presented by the program.

While the implementation of the trade-in program may take time at the local level, several cities and provinces have recently announced details on how residents can participate in the initiative. For ATRenew, a company specializing in secondhand goods, the government’s support for trade-ins is viewed as a step towards long-term development in the secondhand market. Trade-in volume for specific products has shown some growth in certain categories and regions, with trade-in orders from platforms like JD.com increasing significantly since the policy was introduced.

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