A Landmark Fiscal Intervention
China's nationwide trade-in-goods subsidy programme — covering automobiles, home appliances, consumer electronics and furniture — surpassed 1 trillion yuan in total subsidies disbursed through the first half of 2026. The milestone underscores the government's sustained bet on consumption-led stimulus to offset lingering weakness in the property sector and flagging export demand from key markets.
How the Programme Works
Consumers trading in old goods (cars, appliances, electronics) for new, higher-quality alternatives receive direct subsidies, typically ranging from 500 to 15,000 yuan per item, depending on category and energy efficiency rating. The programme is co-funded by central and local governments, with retailers and manufacturers chipping in through promotional pricing.
Consumption Data in H1 2026
| Indicator | H1 2026 Result | YoY Change |
|---|---|---|
| Total retail sales of consumer goods | — | +2.7% |
| Services retail sales | — | +5.3% |
| Final consumption contribution to GDP | — | +2.1 pp to GDP growth |
Auto and Home Appliance Effect
Automobiles and NEVs have been the standout categories. The subsidy, combined with the extended NEV purchase tax exemption (now through 2027), helped push June NEV penetration to 63%. Home appliance and furniture vouchers are estimated to have driven an additional 300 billion yuan in retail sales above baseline.
Risks and Fiscal Sustainability
The fiscal cost is substantial. With local government finances already strained by the property downturn, questions arise about the programme's durability through H2 2026 and into 2027. Officials have signalled a shift toward more targeted — rather than blanket — subsidies in the next phase, prioritising high-energy-efficiency goods and rural consumer access.