China stimulus scheme lifted 2024 consumption growth by 1 pct point

BEIJING (Reuters) – China’s stimulus scheme for consumer goods trade-ins boosted last year’s consumption growth by more than 1 percentage point, Vice Commerce Minister Sheng Qiuping said on Friday, as authorities steer expansion of the plan this year.

Sales of cars, home appliances, electric bicycles and other products under the scheme launched last year reached 1.3 trillion yuan ($179.45 billion), boosting 2024 retail sales growth by more than 1 percentage point, Sheng told a news conference.

In 2024, China’s retail sales grew 3.5% year-on-year.

China will unveil more steps to boost consumption this year, including efforts to upgrade consumption and expand consumer trade-ins, while accelerating the integration of domestic and foreign trade development, Sheng said.

But some analysts say the boost may only last so long.

“Although we believe the trade-in scheme has significantly raised durable goods sales in Q4 2024 and will boost digital goods sales in Q1 2025, we expect the positive impact to fade rapidly, followed by a payback in H2 2025,” Ting Lu, chief China economist at Nomura, said in a recent note.

The special characteristics of durable goods means strong sales are not sustainable and there might also be some substitution effect, as households may shift their purchases to durable goods from other products due to the subsidies, Lu said.

China this month added more home appliances to the list of products that qualify for the consumer trade-in scheme and will offer subsidies for additional digital goods this year, in an effort to revive demand in the sluggish household sector.

China last year apportioned about 150 billion yuan from the 1 trillion yuan of special treasury bonds issuance to subsidise replacements of old appliances, cars, bicycles and other goods, and officials have pledged to expand the funding this year.

($1 = 7.2445 Chinese yuan renminbi)

(Reporting by Kevin Yao)