Currently, China’s economy is facing a deep structural crisis, with a high youth unemployment rate, severe domestic demand shortages, and consumer confidence reaching record lows. In an effort to stimulate consumption, the Chinese Communist Party (CCP) has been continuously rolling out policies such as trading in old items for new ones, but the effects have been limited. By the end of June, the third batch of national subsidy funds for consumption is set to be released, with state media promptly promoting it as a way to “energize consumption and invigorate the market,” sparking heated debates online.
On June 19th, CCP state media CCTV reported that a total of 62.5 billion yuan (RMB) in funds for trading in old items for new consumer goods will be officially distributed by the end of June, and the 2026 New Energy Vehicle Rural Promotion Program has also been officially launched.
According to CCTV, “These two waves of incentives are worth having. The ultimate goal of national policies has always been to benefit ordinary people, boost consumption, and revitalize the market. By trading in old items for new ones, we bring a sense of gain to everyone and unleash the resilience and new potential of the Chinese economy.”
Subsequently, the topic labeled “Energizing Consumption, Revitalizing the Market” sparked discussions online. After the official CCTV news report was published on their Weibo account, selected comments were shared.
Netizens expressed concerns such as, “With the economy sluggish and employment unstable, where will the drive for consumption come from?” and “Everyone wants to consume, the key issue is the lack of money, and most people simply do not see the money.”
“Experts are busy figuring out how to allocate billions in subsidies to give us the ability to ‘trade in old for new,’ but they fail to understand that what most people truly want to renew is not their cars or appliances but their own wallets that are empty and feeble!”
“The statement ‘Consumption is not driven by slogans but by enabling ordinary people to earn money and have confidence in the future’ has resonated with many, pointing out that the essence of consumption vitality lies in income growth and trust relationships.”
“The upcoming release of 62.5 billion yuan for trading in old items for new goods by the end of June, along with the simultaneous launch of the 2026 New Energy Vehicle Rural Promotion Program, continues to strengthen policies to activate the consumption engine. However, public opinion is more focused on the fundamental contradiction that ‘consumption only gains momentum when the wallet is full’.”
Earlier on June 16th, data on the national economic performance for May released by the CCP National Bureau of Statistics showed ongoing weak domestic demand, with a 0.6% year-on-year decrease in total social retail sales of consumer goods in May, marking the first negative growth since the end of the nearly three-year-long “dynamic clearance” epidemic prevention policy in December 2022.
According to Reuters, this figure fell below earlier expectations. Even with the 5-day “May Day holiday” in May, consumer confidence was not lifted, and the impact of the government’s old-for-new plan is gradually diminishing.
In response to this, Chinese scholar Wang He analyzed that for a long time, total social retail sales of consumer goods in China had been growing at a rate higher than the GDP growth rate. From 2012 to 2019, the actual growth rate of total social retail sales outperformed the actual GDP growth rate comprehensively and steadily. However, since 2020, after the impact of the epidemic, the relationship between the growth rate of total social retail sales and GDP growth rate has been fluctuating, often with the GDP growth rate outpacing it.
Studying the relevant data, he mentioned, “‘Social retail sales lag behind GDP growth’ has become the norm. This indicates: (1) The wealth distribution leans towards the production side; (2) Structural imbalances between strong production and weak consumption, relying on the international market to address overcapacity; (3) Residents’ consumption rate is decreasing, often opting for a ‘defensive saving’ strategy, while the wealth effect of real estate disappears, leading to saturation in physical goods and a mismatch in consumption structure upgrade; (4) The lack of consumer-end support for prices is transmitted to the slowdown in nominal GDP growth, and the Chinese economy is facing a cycle of ‘low inflation/mild deflation’.”