Appliance replacement campaign can help stimulate consumption

At a recent financial conference, the top leader stressed the country should accelerate product upgrading to promote high-quality development, and guide a new round of equipment upgrading and the replacement of old consumer goods with new ones.

China’s economy is now shifting from high-speed development to high-quality development, and people’s desire for consumption upgrading has also become stronger. The yearning for a better life requires more abundant and diversified products supply. At the same time, the global political and economic environment is undergoing complicated and volatile changes that have not been seen in decades. In order to accelerate the construction of the new development paradigm, China should further unblock domestic circulation channels and boost domestic demand.

Data from the National Bureau of Statistics show that consumption has become the main driver of China’s economic growth. Therefore, the country needs to further consolidate the recovery trend of consumption and create new consumption growth points.

In the wake of the 2008 global financial crisis, China launched a large-scale campaign to promote household appliances to enter the countryside under government subsidies. This initiative not only boosted domestic consumption, but also enabled more residents to enjoy consumption upgrading. It also played an active role in promoting China’s industrial transformation and upgrading, while some enterprises achieved leapfrog development.

Backed by aggressive interest rate hikes by the US Federal Reserve last year, China’s exports have encountered headwinds, making it necessary for China to initiate a new campaign to promote the replacement of old household appliances with new ones across the domestic market, to promote market vitality and strengthen consumption motivations.

In recent years, China’s new energy industry has developed rapidly, becoming a major player in a number of categories. Therefore, promoting the replacement of old products with new ones is a move that suits China’s industrial transformation and upgrading.

Compared with the last government-led and subsidized campaign, the replacement of old equipment with new is a government-guided and enterprises-led initiative based on market rules, which will promote more efficient dovetailing between supply and demand. However, the actual effect of some measures still needs to be improved after the lack of financial supports.

To facilitate the smooth advancement of the initiative, while trying to build a friendly business environment and provide relaxed and inclusive policy conditions for enterprises, the country should also strengthen fiscal policy intensity and provide more subsidies and support to enterprises and consumers.