China Implements Large-Scale Equipment and Consumer Goods Trade-in Plan to Boost Economy

The sluggish global recovery, especially weak economic growth in Europe, has affected the Chinese economy. Although China’s export figures in the first two months of this year were ideal, with exports growing by 7.1% in US dollars, there are still huge challenges ahead, and economic growth must be vigorously promoted to prevent stalling. One of the measures that has received relatively little attention from the outside world is the “replacement of old items with new items”.

At the economic-themed press conference of the National People’s Congress on March 6, Zheng Shajie, director of the National Development and Reform Commission, said that the National Development and Reform Commission pushed relevant departments to formulate an “Action Plan for Promoting Large-Scale Equipment Updates and Trade-in of Consumer Goods”, focusing on the implementation of equipment updates and trade-in of consumer goods, which will Greatly promote the domestic demand market. Don’t underestimate the concept of trade-in, it actually spans infrastructure investment, manufacturing equipment upgrades, and trade-in of durable consumer goods, and involves a wide range of links.

Zheng Shanjie mentioned in detail at the press conference that the trade-in for old equipment will focus on equipment updating operations, focusing on seven fields including industry, agriculture, construction, transportation, education, cultural tourism, and medical care. In addition to replacing old equipment with new ones, we also promote equipment upgrading and transformation in key industries around energy conservation and carbon reduction, digital transformation, and intelligent upgrading. In addition, it also promotes the updating and upgrading of education, cultural tourism, medical and other equipment, driving the production and application of more advanced equipment. Investment in this area mainly involves government expenditures and expenditures by state-owned enterprises.

I have a friend who makes railway-related parts. He said that the update of these equipment has been launched recently. For example, the design life of the parts he sells is 8 years. Now the government promotes replacement after 5 or 6 years. Although the old parts are scrapped before they expire, Using new parts can also improve efficiency and increase safety. This is the most substantial way to stimulate the economy.

In addition, the trade-in action for durable consumer goods will be carried out to trade-in durable consumer goods such as cars, home appliances, and home furnishings. For example, old cars that meet the mandatory scrap standards will be phased out in accordance with the law, consumers will be encouraged to trade in old home appliances for energy-saving ones, and strong support will be given to promoting aging-friendly equipment at home. This part of the renovation depends on government policies and even subsidies, because consumers may not voluntarily update their old home appliances early, and they may not be willing to invest in aging-friendly renovations at home. However, if the government provides subsidies, it will greatly stimulate needs in this regard.

Don’t underestimate the trade-in, the economic scale it brings is quite large. China is a major manufacturing country and ranks first in the world in terms of the number of many equipments it owns. At the end of last year, the assets of industrial enterprises above designated size exceeded 160 trillion yuan. With the advancement of new industrialization, the demand for advanced equipment has been growing. Last year, China’s industrial agriculture and other key areas The scale of investment in field equipment is approximately 4.9 trillion yuan. Zheng Shanjie pointed out that with the further advancement of high-quality development, the demand for equipment updates will continue to expand. It is initially estimated that it will be a huge market with an annual scale of more than 5 trillion yuan.

As for durable goods consumption, the number of civilian cars in China reached 336 million last year, and the number of major home appliances such as refrigerators, washing machines, and air conditioners exceeded 3 billion. Zheng Shanjie estimates that the upgrading of cars and home appliances can also create a trillion-dollar market. market space.

In fact, the country’s thinking is very clear. On the one hand, in order to develop high-quality productivity in the future, it can no longer rely on traditional labor-intensive manufacturing. But on the other hand, the country cannot rush the economy through investment, whether it is investing in new industries or Infrastructure construction should not be wasted blindly. For example, even if some third- and fourth-tier cities open high-speed rail, many people may not take it. Therefore, the country’s investment has now reached deep water areas and cannot be carried out quickly, otherwise it will create a bubble. Therefore, trading in old equipment for new ones is a better way to promote investment. It does not necessarily mean starting a new project, but it can be the renovation of old equipment, so that there are fewer wasted opportunities.

Therefore, the mainland does not engage in flood irrigation and does not print large amounts of money to stimulate the short-term economy. This does not mean that it will not spend money to promote economic development. However, it must be used appropriately. Promoting large-scale trade-in of old for new is one of the key measures.

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Lu Yongxiong

2024-03-11 18:00:00
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