China Boosts Consumption with Expanded Trade-In Scheme Amid Global Trade Tensions

China's government is enhancing its consumer trade-in scheme to stimulate domestic demand amid global trade tensions. The program, featuring subsidies for household appliances and vehicles, aims to boost consumption by providing financial incentives for trade-ins. These measures could lead to increased short-term spending but pose long-term consumption risks.

In an ambitious bid to counteract weak external demand, Chinese authorities have committed to a vigorous boost in consumption through an expansive consumer trade-in scheme. This initiative seeks to bolster domestic spending amid escalating global trade tensions.

Key elements of this strategy include considerable subsidies for a range of household products and vehicles, effectively reducing costs for consumers. The scheme covers a broad spectrum of items like refrigerators, computers, and even electric vehicles, offering subsidies up to 20% of their sales price.

While initial impacts seem promising, with significant boosts in last year’s consumption figures, experts caution that such schemes may inadvertently dampen future spending on unsubsidised items, as consumers may defer purchases once the incentives expire.

(With inputs from agencies.)