Optimized trade-in policies to harness fresh potential

China will weigh more efforts toward stimulating service consumption, optimizing consumer goods trade-in policies and tapping the spending power of smaller cities, to further unleash the consumption potential of 1.4 billion people, the country's top commerce official said.

"China's total retail sales of consumer goods in 2025 exceeded 50 trillion yuan ($7.18 trillion) for the first time," said Commerce Minister Wang Wentao. "Measured by consumption volume, the country has become the world's largest market across multiple key sectors and product categories."

"This mega-sized market serves as a crucial foundation for promoting high-quality development and a bedrock of resilience in navigating risks and challenges," Wang said in a recent interview with Xinhua News Agency.

Looking into 2026, Wang noted that China is moving to foster new growth areas in service consumption, as rising incomes and evolving lifestyles accelerate a shift in spending patterns from goods toward a more balanced mix of products and services.

Wang pinpointed a range of high-potential service sectors — from transport, housekeeping, online audio-visual content and extended-stay tourism, to emerging areas like live performances, sports events, gaming and emotional or experiential services — as priorities for policy support and market expansion.

Data from the National Bureau of Statistics show that the growth rate of service retail sales outpaced the retail sales of goods by 1.3 percentage points in the first eleven months of last year.

"As disposable incomes rise, Chinese consumers are increasingly seeking quality experiences, not just products," said Jiang Zhao, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation.

Targeted support in these dynamic service sectors can unlock significant demand and enhance overall welfare, Jiang said.

To this end, the State Council, China's Cabinet, announced earlier this month to extend the interest subsidy policies targeting both personal consumer loans and business loans in the services sector.

These programs offer an annual interest subsidy of 1 percentage point on eligible loans. It means that if a loan is taken out at 4 percent, the borrower will only have to repay 3 percent.

According to calculations by the Finance Ministry, every 1 yuan in interest subsidy funds could potentially leverage 100 yuan in loan funds for household consumption or service supply in the consumer sector.

On top of shoring up service consumption, Wang, the senior commerce official, said that the consumer goods trade-in initiative will provide stronger support for the consumption of "green and smart" products.

"Through policy guidance to create broader markets for new products and technologies, we aim to foster emerging sectors and industries," Wang said.

Additionally, active support will be given to offline brick-and-mortar retail, encouraging physical stores to leverage their comparative advantages, create diverse shopping experiences, enhance consumer engagement and promote balanced development between online and offline channels, Wang added.

Earlier this month, China front-loaded 62.5 billion yuan from ultra-long special treasury bond funds as the first batch of funds to support the trade-ins of consumer goods for this year, according to the National Development and Reform Commission, the country's top economic regulator.

"Fiscal funds earmarked from the fiscal bonds to underpin trade-ins are expected to rise to 500 billion yuan in 2026, higher than the 300 billion yuan in 2025," said Wang Qing, chief macro analyst at Golden Credit Rating International.

Sales of consumer goods under China's trade-in program exceeded 2.6 trillion yuan last year, benefiting over 360 million people, data from the Ministry of Commerce show.

Commerce Minister Wang also pointed to "lower-tier markets", represented by tier-three and tier-four cities and counties, as huge untapped potential for consumption growth.

This segment is home to 70 percent of China's population and accounts for 60 percent of the country's total retail sales. It is one of the fastest-growing and most promising regions for consumption, Wang noted.

"We will adapt to local conditions and tailor measures accordingly, improving circulation infrastructure, optimizing the market environment, and enriching consumption scenarios, to unlock the potential of this blue ocean of incremental growth," Wang said.