From Auto to Appliances: A Consumption Policy Powerhouse
China's trade-in subsidy programme — a multi-round effort to stimulate domestic consumption by subsidising the replacement of old consumer goods — has cumulatively channelled more than 1 trillion yuan in effective consumer purchasing power since its inception in 2022. The 2026 iteration, currently running, extends subsidies across consumer goods, automobiles and home appliances, with expanded coverage and simplified redemption.
2026 Programme Scope
- Automobiles: NEV purchase tax fully waived; central government subsidy of 7,000–10,000 yuan per vehicle, topped up by provincial/city governments. This has been a primary driver of China's NEV penetration rate rising from 6% in 2021 to nearly 50% by mid-2026 — the world's largest NEV market by volume, with 744,600 NEVs sold in June 2026 alone
- Home appliances: covers refrigerators, washing machines, TVs, air conditioners,厨余 processors and solar water heaters. Individual-unit subsidies cap at 2,000 yuan. The programme has facilitated the replacement of hundreds of millions of units over four rounds
- Consumer goods (2024 onwards): added categories such as smart home devices, fitness equipment and electric bikes
Policy Design and Impact
Trade-in subsidies serve multiple goals simultaneously: boosting headline consumption, reducing manufacturers' inventory backlog (especially relevant in the appliance sector), accelerating the green transition through energy-efficient replacements, and supporting employment across retail and manufacturing supply chains. Fiscal cost exceeds 1 trillion yuan in cumulative government spending — a significant commitment during a period of structural economic transition — but policymakers consider it essential for stabilising domestic demand.
Looking Ahead
The 2026 programme is widely expected to run through year-end, with potential expansion into furniture,家装 and cultural goods in Q3. The mechanism has proven effective enough to become a structural tool of China's demand management rather than a one-off crisis response.