China Allocates 300 Billion Yuan in Special Bonds to Boost Equipment Upgrades and Consumer Goods Trade-In Programs
China’s National Development and Reform Commission (“NDRC”) and Ministry of Finance recently issued a notice outlining measures to intensify support for large-scale equipment upgrades and consumer goods trade-ins. This directive, known as “the Measures,” includes plans to allocate around 300 billion yuan in ultra-long-term special bonds to support these initiatives.
The Measures specify that nearly 150 billion yuan will be allocated for equipment upgrades. This funding will not only cover traditional areas such as industrial, environmental infrastructure, transportation, logistics, education, culture, and healthcare but will also extend to the energy and power sector’s facility upgrades, old elevator replacements, energy-saving initiatives, carbon reduction efforts, and safety modifications in key industries. The aim is to adjust these measures dynamically based on actual needs.
Local governments are encouraged to prioritize support for vehicle scrappage and passenger car replacement for individual consumers, trade-in programs for home appliances and electric bicycles, and purchases of materials for house renovations, including kitchen and bathroom upgrades and elder-friendly modifications. Additionally, the Measures seek to boost consumption of smart home products.
Key areas for promoting trade-in programs include automobiles and home appliances. Mr. Xu Xingfeng, director general of the Department of Market Operation and Consumption Promotion at China’s Ministry of Commerce, highlighted that subsidies for consumers who scrap old cars and purchase new ones have been significantly increased. For instance, the subsidy for buying a new energy passenger car has been raised from 10,000 yuan to 20,000 yuan.
The Measures also outline increased subsidy standards for the scrappage and renewal of old commercial vehicles and ships, agricultural machinery, new energy buses, and power battery updates.
To address the high application thresholds for equipment upgrade projects in industrial sectors and the challenges faced by small and medium-sized enterprises (SMEs) in meeting these requirements, the Measures eliminate the criterion of “project total investment of no less than 100 million yuan.” This change aims to allow more SMEs to benefit from the support policies.
During a special press conference held by the NDRC, Mr. Zhao Chenxin, vice chairman of the NDRC, announced that approximately 150 billion yuan for consumer goods trade-in support and the first batch of around 50 billion yuan for equipment upgrades would be allocated soon. There are also plans for a new round of equipment upgrade project applications and reviews, with the goal of disbursing the entire 300 billion yuan by the end of August.
These measures are crucial for stimulating economic growth and promoting sustainability in various industries. By providing support for equipment upgrades and consumer goods trade-ins, China is taking proactive steps to boost innovation and drive consumption in key sectors.
