Logo 04 Mar 2024

Trade in your old for a new

Looks like officials think they're onto a winner with their new focus on developing trade-in programs.
Friday's State Council executive meeting, chaired by Premier Li Qiang, approved an action plan for an industrial equipment and consumer goods trade-in program.
Some context: In February, the Centra...

Looks like officials think they're onto a winner with their new focus on developing trade-in programs.

Friday's State Council executive meeting, chaired by Premier Li Qiang, approved an action plan for an industrial equipment and consumer goods trade-in program.

Some context: In February, the Central Commission for Financial and Economic Affairs (CCFEA) said China should develop trade-in programs to upgrade industrial equipment and boost consumption, especially of automobiles, home appliances, and other durable consumer goods.

According to the State Council executive meeting readout, the new action plan will:

  • Strengthen fiscal, tax, and financing support for trade-ins
  • Promote equipment upgrading and trade-in programs to favor low-energy-consumption, low-carbon-emission, and technologically advanced goods and equipment
  • Accelerate equipment upgrading for construction, transportation, agricultural machinery, education, healthcare, and public infrastructure
  • Establish a recycling system for re-manufacturing and re-utilizing old and obsolete equipment

Get smart: These new trade-in programs smack of desperation – and are unlikely to put consumption on a sustainable footing.

  • They will likely bring about a short-term pop in consumption – but at the expense of future sales.

Get smarter: When it comes to the main problem facing the economy – households' pessimism about their financial future – officials don't seem to have a solution.

sources

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