Several provinces in China have recently announced the suspension of applications for subsidies for the “old-for-new” program on consumer goods. This decision comes at a time when China is in the midst of the mid-year consumer season known as “618,” leading to disruptions in the market. State media outlets in China have criticized some for hyping up the “cancellation of national subsidies” to create a sense of panic, with analysts suggesting that this is an attempt to shift blame for policy setbacks onto others.
Reports indicate that cities in provinces such as Jiangsu, Hubei, Chongqing, Guangxi, Henan, Guangdong, and Zhejiang have successively announced the suspension of applications for subsidies under the “old-for-new” program on consumer goods, citing reasons such as temporary adjustments or depletion of initial round subsidy funds.
During the current “618” mid-year shopping season in China, a crucial period for stimulating consumer spending for brand retailers, the suspension of some regions’ national subsidies has led to a situation where some household appliance businesses are not seeing the anticipated surge in sales during the promotion period.
In a report on June 18, a representative from a chain store in South China expressed, “With the national subsidy being suspended, we are unable to drive sales,” as the issuance of national subsidy vouchers for exchanging old appliances came to a halt on the 6th of the month and expired at midnight on the 10th.
Another representative from a chain store in Central China mentioned that due to restrictions on acquiring local subsidy vouchers, consumers who were unable to obtain these vouchers would adopt a wait-and-see approach. A representative from a chain store in Northwest China revealed that with the suspension of the national subsidy in the region, foot traffic has decreased, prompting them to focus on attracting customers through live streaming on platforms like Douyin during the “618” sales promotion period. Additionally, a professional from a television company stated that the temporary suspension of the national subsidy in some areas has had a significant impact on the final push for sales during this year’s “618” promotion.
In June, multiple regions in China put a halt to subsidies for the purchase of new cars through the “old-for-new” program, affecting the domestic automobile market.
Data from the China Passenger Car Association shows that from June 1 to 8, approximately 343,000 passenger cars were sold nationwide, marking a 19% year-on-year increase but a 12% decrease compared to the previous period.
Despite regions announcing only the “suspension” of the old-for-new subsidies, an article in the People’s Daily on June 19 highlighted, “The situation where national subsidies are canceled does not exist.” It clarified that areas are only temporarily refining the implementation rhythm of the national subsidy policy and that the program for exchanging old products for new ones would continue throughout the year, providing consumers with opportunities to apply for the subsidies on a monthly and weekly basis.
The report also criticized certain companies, platforms, and self-media for exploiting the situation, engaging in fear-mongering marketing tactics, and advised consumers to be discerning.
In response, Chinese netizens commented, “The car subsidies have intensified the internal competition in the automobile industry. It would be better to distribute the money directly to the whole country or to low-income earners.” “When even the national subsidies for electric vehicles are hard to obtain, and now you have to compete for them, with each store only having one quota per day, it becomes unattainable for many.” “It doesn’t matter, if the subsidies are stopped, then I won’t make the purchase.”
Political commentator Li Lin told Epoch Times that the report from the Chinese state media is an attempt to shift blame onto others for the setbacks in the official “old-for-new” policy. For regions facing financial difficulties, the sustainability of this policy relies on financial support from the central government. However, with the central government also facing constraints, they are resorting to drastic measures. Yet, relying solely on subsidies to drive consumption in the long run seems unsustainable.
A resident from Sichuan, Mr. Lu, shared, “The policies of the Chinese Communist Party change frequently and impulsively. Previously, they implemented schemes like ‘send appliances to rural areas,’ offering subsidies for buying appliances, or giving you discounts. Later, during tough times, officials and civil servants in many places saw pay cuts. Offices were set up to ‘sell old items for cash,’ and last year, they introduced the ‘old-for-new’ policy. The primary aim is to stimulate consumer spending; people are reluctant to buy new things when they have old items, causing products manufactured by these factories to remain unsold, leading to inventory pile-ups. Therefore, the government encouraged people to exchange old items for new ones, but it’s challenging since people are financially constrained and can’t afford to consume.”
A resident from Hefei, Anhui, Mr. Li Qiang, stated, “For many years, people have been burdened by mortgages, car loans, and expenses for children’s milk powder. Now, many are facing unemployment, and medical costs are high. People’s long-standing savings have been depleted; a single mortgage can wipe out the savings of several generations. Hence, various stimulus policies currently lack substantial impact and hold no real significance.”
The Chinese Communist Party officially launched the “national subsidy” policy last year, which involves upgrading equipment and offering subsidies for the exchange of consumer goods. This policy covers a wide range of sectors such as household appliances, automobiles, and this year, digital products like smartphones have also been included in the subsidy scheme.
Despite the official claims by the Chinese Communist Party that the “old-for-new” policy for consumer goods across five major categories is expected to drive total sales of 1.1 trillion yuan in 2025, the policy has sparked controversies due to the issues it has brought. For instance, the prolonged price wars in the Chinese automobile industry for three years have intensified, leading to chaos as companies vie for opportunities presented by government subsidies; this has resulted in the influx of new cars into the market under the guise of “zero-kilometer second-hand cars.”
Moreover, many consumers have taken to social media to disclose instances where, following the introduction of the “old-for-new” subsidy policy last year, prices of products on e-commerce platforms and in physical stores suddenly surged. The post-subsidy prices were not significantly different from the pre-subsidy prices, with some even being more expensive, indicating that merchants were exploiting the subsidy scheme, and cases of manipulation and deception abound.
Economic commentator Xiao Yi previously argued in an article for Epoch Times that the CCP’s efforts to boost consumption through the “old-for-new” policy have fallen short. The fundamental issue in the Chinese economy lies in the imbalance between supply and demand; industry policies of long-term subsidies to companies stimulate their supply expansion. Due to income distribution imbalances, excessive concentration of finances in state-owned enterprises and the government has resulted in inadequate personal incomes, leading to reduced purchasing power at the household level. While the authorities have trumpeted slogans this year about increasing subsidy sizes, there have been few tangible results, highlighting the policy’s subsequent lack of momentum.