Expansion of China's Trade-In Scheme
China is extending its consumer trade-in program, originally launched in March 2024, to help stimulate demand in the struggling household sector. The scheme now includes additional home appliances such as microwave ovens, dishwashers, and rice cookers. In an effort to boost the digital goods market, subsidies are also being offered for products like smartphones, tablets, and smartwatches. Consumers who trade in old products can receive subsidies ranging from 15% to 20% on new items. With a total budget of 81 billion yuan ($11 billion) for 2025, the program aims to encourage consumer spending and rejuvenate the economy.

Program’s Impact and Concerns
Launched with a budget of 150 billion yuan, the trade-in initiative has already shown tangible effects, with 36 million consumers using the scheme to purchase 240 billion yuan worth of home appliances and boosting car sales by 920 billion yuan. The Chinese government has reported "visible effects" on consumer spending. However, some economists remain skeptical, arguing that while the scheme might create short-term growth, it could merely shift future demand into the present. This means that while immediate spending may increase, long-term demand could decrease.

Challenges and Long-Term Sustainability
Critics compare China’s trade-in program to the "cash for clunkers" initiative introduced by the US during the 2008 financial crisis, which was also aimed at stimulating consumer demand. While the current scheme offers short-term gains, experts like Frederic Neumann from HSBC stress that it is insufficient for creating sustainable long-term growth. Additionally, the expansion of the program comes amid China's broader economic difficulties, including weak consumer demand and an ongoing property crisis. Economic leaders in China have recognized the need for further measures to boost consumer spending in the coming years.