Upgrades to encourage spending

With the imbalance between strong supply and lukewarm domestic demand still existing, China's renewed push for large-scale equipment upgrades in 2026 is expected to reinforce domestic demand, stimulate productive investment and advance greener, smarter industrial upgrading, thereby adding fresh momentum to consumption and broader economic growth, experts said.

The country will broaden its equipment renewal push, targeting a wider range of sectors while speeding up the retirement and replacement of aging commercial vehicles, expanding the deployment of new-energy city buses and upgrading outdated farm machinery, said a joint notice released recently by the National Development and Reform Commission and the Ministry of Finance.

Experts said the latest subsidy programs will play a pivotal role in stimulating investment and boosting consumption, reinforcing China's top economic priority for 2026 — expanding domestic demand — as highlighted at the recently concluded annual Central Economic Work Conference.

"Subsidies for equipment renewals will be expanded and improved," Li Chao, spokeswoman for the NDRC, said at a recent news conference, adding that the expansion will cover elevators in older residential buildings, equipment for eldercare facilities, firefighting systems, rescue and testing purposes, as well as upgrades at brick-and-mortar consumer venues such as shopping malls and commercial complexes.

Zhu Keli, founding director of the China Institute of New Economy, said broader policy coverage in public welfare and safety-related areas will drive demand for equipment manufacturing while supporting capacity expansion and quality upgrading in sectors such as eldercare and firefighting.

"In particular, it will boost demand for the manufacture and installation of equipment such as elevators and firefighting systems, thereby generating new momentum for investment growth," Zhu said.

Notably, subsidy criteria will be fine-tuned to better target real needs, with tiered support for replacing aging residential elevators based on the number of floors, and preferential backing for upgrading old commercial trucks into electric equivalents, said the NDRC.

Zhu said the more targeted and efficient subsidies will encourage households to replace outdated equipment and purchase greener and smarter products, helping upgrade residential consumption.

Highlighting green development as a priority, Zhu added that the optimization will boost consumption of new-energy and energy-efficient equipment and strengthen coordination along the industrial chain, thereby reinforcing momentum for the expansion of domestic demand.

In addition, Li added that the NDRC will streamline project application mechanisms and review procedures, further reduce investment thresholds, and strengthen support for small and medium-sized enterprises.

Yuan Jianqin, a researcher at the State Information Center, said small and medium-sized enterprises account for a large share of economic activity and are an important source of innovation and employment, meaning that lowering investment thresholds for equipment renewal projects will help reinforce the momentum of effective investment.

Bai Wenxi, vice-chairman of the China Enterprise Capital Union, shared this optimism.

"Our estimates suggest that equipment renewals in 2026 could generate about 1.1 trillion yuan ($150 billion) in fixed-asset investment and add roughly 0.7 to 0.8 percentage point to GDP growth,"Bai said.

Looking ahead, Zhu said effective policy implementation will be underpinned by establishing a stable pipeline of equipment renewal projects in key sectors, harmonizing technical and phase-out standards, and strengthening oversight across the funding process.

Zhang Chenxu contributed to this story.