Central government funds are committed to encouraging consumers and replacing them with old equipment and goods, which is a pillar of the economic development plan of about 5% this year. As quoted in a Bloomberg report, the household and business equipment renewal project may receive support from the central government budget alongside tax reliefs and targeted credit from banks, the State Council of China announced on Wednesday. The Chinese action plan aims to increase equipment costs in sectors such as industry, agriculture, transport, education and healthcare by at least 25% by 2027 compared to last year, China’s main economic planning agency said in a separate communication. The announcements did not specify the amount of state funding for the programme, first mentioned by the President Shi Jinping in February as a way to boost demand for goods. China’s 2024 growth objective is considered ambitious because the economy faces weak domestic demand caused by continued downturn in the housing market and low confidence between businesses and consumers. These factors also lead to deflation, which increases discussions about China’s exports. If China spends around 800 billion yuan ($111 billion) to provide a 20% subsidy for purchases of upgraded cars, large household appliances and equipment, the plan could lead to further costs of 800 billion yuan this year, worth about 0.6% of last year’s GDP estimated by Goldman Sachs Group economists.
China: Commits state reserves to enhance equipment replacement in households and businesses
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