Shoppers check out smartphones at a store in Zaozhuang, Shandong province. As part of support for consumer goods trade-ins this year, subsidies for digital devices will be extended to smartphones and tablets.[SUN ZHONGZHE/FOR CHINA DAILY]
China will significantly increase the scale of ultralong special treasury bonds to provide greater support for consumer goods trade-ins this year, extending the subsidies to digital devices such as smartphones, tablets and smart wearables to drive economic growth through consumption-boosting initiatives, analysts said.
While the trade-in policies centered on traditional big-ticket items like automotives and household appliances last year, the latest decision to include digital products signals the country's determination to boost demand in the face of rising global uncertainties, they added.
The National Development and Reform Commission, the country's top economic regulator, said earlier this month that the country will provide consumers with a 15 percent discount on the purchase of such digital gadgets not exceeding 6,000 yuan ($818.5), with a 500 yuan subsidy cap per item.
The subsidy for digital products will be open to all eligible brands and models, said Li Gang, an official with the Ministry of Commerce, adding that the country will allow equal participation from a diverse range of enterprises, including both online and offline players, as well as companies of various ownerships and sizes.
Digital devices have become essential tools for communication, entertainment and productivity in modern society. By incentivizing their replacement and upgrading, the government aims to directly stimulate consumer willingness to buy, said Zhu Keli, founding director of the China Institute of New Economy.
Last year, Jiangsu and Guizhou provinces piloted the trade-in program for smartphone purchases, which proved effective in stimulating consumer appetite for device upgrades and encouraging the adoption of higher-priced models, Zhu said.
As the smartphone replacement cycle that began at the end of 2023 gradually gains momentum, International Data Corp, a global market research company, foresees a sustained growth trajectory for China's smartphone market in the coming years, buoyed by the anticipated introduction of government subsidies.
China's smartphone shipments are projected to reach 289 million units by 2025, representing a 1.6 percent year-on-year increase, with the market expected to maintain a stable growth trajectory in the following years, according to a report by IDC.
In addition, the trade-ins can create a virtuous cycle, where increased consumer demand accelerates product turnover and spurs enterprises to invest in innovation, technological advancement, and supply chain optimization. This can lead to a more dynamic and competitive digital products market, Zhu said.
Honor, a major Chinese phone brand, told China Daily that enterprises in relevant sectors will be able to reap the benefits of trade-in initiatives and fully leverage China's vast consumer market, thereby sustaining the ongoing recovery and driving the next phase of growth in the domestic smartphone market.
It is also providing the impetus for businesses to invest in technological breakthroughs and product differentiation. This can strengthen their long-term competitiveness and market positioning, Honor said.
The funds allocated to support the consumer goods trade-in initiatives are expected to double by the end of 2025, reaching 300 billion yuan, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.
This will drive some 750 billion yuan in new consumption, equivalent to a 1.5 percentage point acceleration in the year-on-year growth rate of total retail sales of consumer goods in 2025, Wang added.
