Beijing is banking on a trade-in plan to upgrade the country’s stock of industrial and household equipment, taking older machines that use more energy and emit pollution, giving a lift to consumer spending and boosting its economy along the way.
The plan was pushed by President Xi Jinping four months ago. China believes the incentives will encourage businesses and households to adopt cleaner technologies.
Here is what Beijing has in mind:
How will this trade-in plan work?
The upgrade, Beijing believes, will help lift consumer spending. It covers everything from heavy industries such as petrochemicals and steel, to installing new elevators in apartment buildings, to incentives for consumers to scrap their old washing machines and buy new ones that use less water.
What is on offer?
Subsidies will be offered to consumers who buy new EVs or other energy-conserving cars. Local authorities will share some of the costs. For appliance upgrades regional governments will shoulder all the burden. Industries will get a mix of subsidies, tax breaks and discounted loans.
How will it save China’s economy?
Economists at Citigroup feel the plan could boost retail sales by about 0.5% this year, while equipment upgrades could increase China’s widest measure of investment by 0.4 percentage points through 2027. Last month, Goldman Sachs economists estimated a 0.6 percentage-point lift to GDP in 2024, with more than two-thirds coming from extra household spending, mostly on cars.
China is often accused by the US and Europe of flooding global markets with cheap goods and not doing enough to meet local demand. The trade-in plan, by helping Chinese buyers, could address the concern.
What happens to the old stuff taken?
It will help boost the country’s recycling ambitions and help Chinese businesses expand in overseas markets, especially in “regions that have high environment standards,” an analyst told Bloomberg.
source : businesstoday