Trade-in subsidy aims to drive more consumption

China's latest move to support consumer goods trade-in programs and large-scale equipment renewal in 2026 will help further stimulate consumption and upgrade industries, creating new growth drivers for the economy, said market watchers and executives of multinational companies.

The government has allocated 62.5 billion yuan ($8.94 billion) in ultra-long special treasury bond funds in advance to support the trade-in program for consumer goods for 2026, according to a notice jointly released by the National Development and Reform Commission and the Ministry of Finance early this week.

The two government branches also issued a joint announcement on Tuesday, detailing measures for the implementation of large-scale equipment renewal and consumer goods trade-in programs in 2026.

Under the new policies, consumers will continue to receive subsidies through trade-in programs for products ranging from automobiles to six types of home appliances — refrigerators, washing machines, televisions, air conditioners, computers and water heaters.

For example, consumers can receive a 15 percent subsidy, up to 1,500 yuan, when buying Grade-I energy-efficient home appliances. Those replacing an existing car with a new energy vehicle will get a 12 percent subsidy, capped at 20,000 yuan.

Peng Bo, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said these measures are expected to encourage households to replace older products sooner and lift demand for greener, higher-quality goods, while giving manufacturers greater visibility on orders and investment — in turn supporting productivity gains and more sustainable growth across sectors.

Highlighting that China's high-level opening-up has been crucial in unlocking new growth avenues, Hubert de Haan, senior vice-president for China at Germany's BSH Home Appliances Group, said Chinese consumers are eager to try new things and have a strong appetite for innovation.

"The market's sheer scale and diversity — from top-tier to lower-tier cities that are also growing in wealth — present vast, untapped potential," he said, adding that government policies to expand domestic demand and boost consumption will drive both consumption and industrial upgrading, with green, smart and built-in products becoming core growth engines.

Building on these expected benefits, policymakers are also broadening the program to better align with emerging consumption trends and new technologies.

The consumer goods trade-in program for the purchase of digital products will also be expanded to include smart products such as artificial intelligence glasses and intelligent home products, including elder-friendly home products.

The expansion of domestic demand is set to top China's major economic priorities this year, according to the recent annual Central Economic Work Conference. The tone-setting meeting outlined plans to roll out consumption-boosting campaigns, along with measures to raise incomes for both urban and rural residents.

As for equipment renewals, subsidy programs will be expanded to include elevators for installation in old residential buildings, equipment used in elderly care homes, and equipment used for firefighting, rescue or testing purposes, according to the NDRC.

Kone Corp, a Finnish elevator manufacturer with over 60,000 employees globally, has been actively contributing to this national initiative by modernizing elevators to contemporary standards, particularly in aging residential complexes where the elderly face daily mobility challenges.

"After delivering one of China's largest bond-funded elevator modernization programs in Kunshan, Jiangsu province, in 2024, we have since replicated this model in more than 40 cities nationwide," said Joe Bao, executive vice-president of Kone.

Bao said that smart capabilities — such as AI monitoring — enable earlier risk detection, while big data and AI analytics drive the transition from reactive servicing to predictive maintenance.

"At the same time, digital integration with government platforms ensures stronger public oversight," he said, adding these efforts have generated strong market momentum, with double-digit growth in Kone's modernization orders in China in 2025.

From January to November of 2025, more than 128 million household appliances were replaced under trade-in programs across China, driving related sales to over 2.5 trillion yuan, data from the State Administration for Market Regulation showed.

zhongnan@chinadaily.com.cn