An employee works busily at an engineering equipment manufacturing factory in Nanjing, East China's Jiangsu Province, on February 29, 2024. China has been the world's top manufacturing hub for 14 consecutive years. In 2023, the value-added of equipment makers above the designated size was up by 6.8 percent year-on-year. Photo: VCG

China on Wednesday released a plan to promote the large-scale renewal of equipment and the trading-in of consumer goods, opening up a huge market worth trillions of yuan.

The action plan, issued by the State Council, the country's cabinet, is aimed at bringing more high-quality durable consumer goods into people's lives, smoothing the recycling chain of resources, and significantly improving the quality and level of economic circulation.

Experts noted that the move will further boost the high-quality development of the domestic consumption market and accelerate the elimination of outdated production capacity, thus realizing the green transformation of the country's economic development.

The plan specifies 20 key tasks in five sectors, including equipment renewal, trading-in of consumer goods, recycling of used goods, standard leveling-up and policy reinforcements, along with fiscal and financial support.

According to the plan, the scale of equipment investment, which covers heavy industry, agriculture, construction, transportation, education, culture, tourism and medical care, is planned to increase by more than 25 percent by 2027 compared with 2023.
For industrial enterprises above the designated size, the penetration rate of digital research and development and design tools should exceed 90 percent, while the numerical control rate of key processes should surpass 75 percent by 2027.

As of 2027, the recycling volume of scrapped vehicles is planned to roughly double from 2023, and used car transactions will increase by 45 percent, while the recycling of used household appliances will increase by 30 percent, the plan states.

Hong Yong, an expert at the Digital Real Economies Integration Forum 50, described the plan as a major decision that focuses on the overall situation of China's high-quality development, as it is closely related to the country's industrial upgrading, green technology and public well-being.

"Trade-ins can effectively promote the vibrancy of the consumer market and stimulate investment growth in related industries, but also accelerate the elimination of backward production capacity, thus promoting the country's industry to a higher level," Hong told the Global Times on Thursday.

Hong noted that the plan is also in line with the strategic requirements of China's green development through reducing energy consumption and environmental pollution.

In addition, the policy of large-scale equipment upgrades merits attention, as it will drive investments in new equipment and significantly enhance company profits while leading to a significant boost in demand for upstream raw materials and components, which could be a tangible advantage this year, Tian Yun, a veteran economist based in Beijing, told the Global Times on Thursday.

"This is expected to exert a positive influence on overall fixed investment, specifically in the realms of equipment replacements and project upgrades. It is foreseen to stabilize the downward trajectory in the growth rate of new fixed asset investment since the previous year," Tian noted.

Zheng Shanjie, head of the National Development and Reform Commission, said during a press conference on March 6 that China's move to promote a new round of large-scale equipment renewals is estimated to create an enormous market worth more than 5 trillion yuan (about $704 billion).

"At the end of last year, the number of cars for civilian-use purposes in China has reached 336 million, and the number of household appliances in major categories such as refrigerators, washing machines and air conditioners also exceeded 3 billion units. Therefore, the upgrade of consumer goods such as automobiles and home appliances is also expected to create a trillion-yuan market," Zheng said. 

According to a report released by China Consumers Association on Thursday, most respondents believed that the consumption environment is getting better, with more than 60 percent of consumers believing that the consumer market was vibrant in 2023 and expecting it to be even more so in 2024.

Looking ahead, Tian anticipated an approximately 6 percent of growth in consumer spending this year. "Such a growth rate is pivotal for ensuring an around 5 percent of GDP growth in the coming years for China's economy," the expert noted.