Photo: CFP

 
Chinese localities have been ramping up efforts to boost consumption, with increased policy support, including direct financial support, for trade-ins of consumer goods and equipment upgrades at companies, in line with a national campaign to bolster domestic demand amid economic recovery. 

The intensifying efforts come as domestic consumption, while holding vast potential, remains under pressure, and plays a critical role in China's overall economic growth. Experts said that the increasing policy support will not only help underpin stable growth in consumption in the short term, but also lay a solid foundation for overall economic development in the long run.  

In recent days, various Chinese localities, including Central China's Hunan Province, South China's Guangdong Province and East China's Shanghai Municipality, have issued detailed plans to boost consumption demand, according to a report by the China Securities Journal on Thursday.

In addition to expanding the coverage of trade-in policies and increasing support for trade-ins in areas such as automobiles and home appliances, the new measures from local governments also specifically mentioned the utilization of capital from ultra-long special treasury bonds, the China Securities Journal report noted. 

Among the highlights of the Shanghai action plan is increased financial support from both the ultra-long special treasury bonds and local counterpart funding, which exceeded 4 billion yuan ($563.3 million), Shanghai Observer reported. 

Another highlight is increased financial support for trade-ins of certain goods. For example, the subsidy for trade-ins of new-energy vehicles was increased from 10,000 yuan to 20,000 yuan, according to the Shanghai Observer report. The policy coverage was also extended to home appliances such as furniture and vacuum cleaners.

The Guangdong provincial government recently released an implementation plan to better utilize funds from ultra-long special treasury bonds to support trade-ins of consumers goods, which also increased financial support for trade-ins of products such as automobiles.

The local plans come after the National Development and Reform Commission and the Ministry of Finance in July issued a plan for equipment renewal and trade-ins of consumer goods, including a fund of 300 billion yuan from ultra-long special treasury bonds to support the campaign. 

City governments have also stepped up efforts to boost trade-ins. Shantou in Guangdong, for instance, said that since May, it has taken various steps to increase trade-ins of consumer goods, and as of July 10, the efforts have led to total consumption of 200 million yuan, the city government said in a statement sent to the Global Times on Thursday, adding that the city will hold various activities in districts and counties to further boost market vitality and create a favorable environment for consumption. 

Unleashing potential 

The ramped-up policy support for trade-ins of consumer products and equipment renewal with the support of funds from the ultra-long special treasury bonds will help boost consumer confidence and unleash the vast potential of China's consumption, experts said. 

"The use of funds from the ultra-long special treasury bonds by various localities to promote trade-ins is an effort to increase consumers' desire to spend by leveraging subsidies, which can be effective in stimulating consumption demand," Tian Yun, a veteran economist based in Beijing, told the Global Times on Thursday. 

Tian said that the campaign to boost trade-ins of consumer goods and equipment renewal is conducive not only to boosting consumption, but also to promoting development in various industries. "This is not a short-term policy to boost consumption, but rather a long-term strategic arrangement," Tian said. 

Boosting consumption demand is critical in supporting the ongoing economic recovery amid external and internal pressure. In July, total retail sales of consumer goods, a broad gauge of consumption, reached 3.7757 trillion yuan, up 2.7 percent year-on-year, according to official data. 

Experts said that while the data showed that domestic consumption continues to recover, there is vast potential for further improvement in demand, and increasing efforts to promote consumption will have a profound positive effect on the economy as a whole.

"Consumer spending will lift domestic demand and promote economic development. On the other hand, trade-ins could lead to development in industries such as recycling, pollution reduction, as well as new momentum for economic development," said Pan Helin, a member of the Expert Committee for the Information and Communication Economy under the Ministry of Industry and Information Technology.