Equipment renewal an effective way to boost domestic demand

China has released an action plan to promote the large-scale renewal of equipment and the trade-in of consumer goods, the Securities Times reported on Wednesday.

The news outlet said equipment renewal is an effective way to boost domestic demand, phase out outdated production capacity, promote industrial structure upgrading and achieve high-quality development.

According to Cinda Securities statistics, so far, China has experienced four large-scale equipment renewal cycles, which are the end of 1982 - the beginning of 1991, the middle of 1991 - the beginning of 2002, the middle of 2002 - the middle of 2009, and the end of 2009 - September 2016.

This round of equipment renewal will create a market size of about 5 trillion yuan ($695.25 billion), affecting several industries, and bringing huge opportunities to relevant listed companies, Securities Times said.

It noted for this round, there have been changes in the relevant sectors of the secondary market, investors have gradually focused their attention on the topic of equipment renewal, and many listed companies have actively responded to the development opportunities.

According to the question data of the interactive platform of the Shanghai and Shenzhen stock exchanges, questions from investors focused on the development opportunities brought by equipment renewal to the company, the impact on the company's performance, and how companies can seize market opportunities.

Securities Times analyzed that equipment renewal is one of the important cycles of economic production activities, and the replacement drives the change of capital expenditure, resulting in economic cyclical changes.

The equipment replacement cycle has a positive effect on economic growth, which can stimulate the recovery of manufacturing investment willingness and boost economic growth.

It is expected that more support policies will be introduced to promote this round of equipment renewal work.

The research report of the Bank of China believes that compared with the previous equipment renewal projects, this round of large-scale equipment renewal underlines the coordination of supply and demand, and pays equal attention to production and service. It is expected that this round of large-scale equipment renewal will drive the overall fixed asset investment growth of 1.2 to 1.5 percentage points, driving GDP growth of about 0.4 percentage points.

This round of large-scale equipment renewal focuses on reducing energy consumption and improving efficiency. It emphasizes high-end, intelligent, green, and digital, which is conducive to cultivating new quality productive forces, Securities Times reported.