China to Provide Strong Financing Support for Equipment Upgrades and Consumer Goods Trade-Ins
China’s Initiative to Boost Domestic Demand and Support the Economy
Chinese officials announced that the government would offer robust financing to companies participating in equipment upgrades and consumer goods trade-ins. This move aims to stimulate domestic demand and provide a much-needed boost to the economy. Last month, China’s cabinet unveiled an action plan with detailed measures to drive investment and consumption.
Financial Support for Large-Scale Upgrades and Trade-Ins
Zhao Chenxin, deputy head of the National Development and Reform Commission, emphasized that substantial financial backing would be available from central investment, central fiscal funds, and other sources for major equipment upgrades and consumer goods trade-ins. Additionally, regional governments are exploring ways to provide financial assistance based on their financial capabilities.
Significant Market Potential for Equipment Upgrades
China’s investment in equipment upgrades in crucial industrial and agricultural sectors surpasses 5 trillion yuan annually. Moreover, the demand for replacing automobiles and household appliances exceeds 1 trillion yuan. Zhao highlighted the immense market space and its undeniable contribution to economic growth, emphasizing the program’s role in boosting consumption, investment, energy conservation, and high-quality development.
Strategic Goals and Potential Growth Impact
China aims to increase equipment investment in key sectors by 25% from 2023 to 2027, alongside initiatives to enhance the recycling of used cars and home appliances. Analysts predict that these efforts could raise China’s equipment investment growth by 3.8 percentage points annually and add 0.4 percentage points to fixed-asset investment from 2024 to 2027. Moreover, consumer goods trade-ins are expected to contribute a 0.5% boost to retail sales this year.
Government Support through Tax Incentives and Interest Rate Subsidies
Fu Jinling, a finance ministry official, revealed that the government would offer tax incentives and interest rate subsidies to firms engaged in equipment upgrades. These measures aim to further encourage companies to participate in the program.
Financial Details
The conversion rate at the time of writing is $1 = 7.2370 renminbi.
