China's consumer spending stimulus efforts offer shot in arm for foreign firms

China's intensified push to energize its consumer market has offered a significant shot in the arm for foreign firms looking to expand in the world's second-largest economy.

China has rolled out a wave of stimulus measures since March 2024, including consumer goods trade-in and large-scale equipment upgrade programs, aiming to unlock the potential of consumer spending and accelerate an economic structural shift toward domestic demand amid an uncertain external environment.

The government revamped these programs earlier this year and doubled down on its subsidy scheme, resulting in a significant uptick in sales of automobiles, home appliances and electronics.

As millions of Chinese consumers trade in their equipment for the latest models ranging from electric vehicles to household appliances, the rising consumer spending has benefited Chinese and foreign brands alike.

China's Ministry of Commerce said on May 12 that the total number of applications for auto trade-in subsidies in the country exceeded 10 million as of May 11. Of the total, applications made in 2025 amounted to 3.23 million, with consumers scrapping nearly 1.04 million cars and purchasing 2.19 million new vehicles with auto trade-in subsidies. New energy vehicles (NEVs) accounted for more than 53 percent of all auto trade-ins since the beginning of the year.

Thanks to the economic stimulus efforts, the Chinese auto market maintained robust growth in the first four months of 2025, with sales rising 10.8 percent to 10.06 million units, according to China Association of Automobile Manufacturers.

Porsche and Tesla are among the foreign auto brands that have been benefiting from the pro-consumption measures, despite varying subsidies in different regions across the country.

"The Chinese government's policies on consumer goods trade-in and large-scale equipment upgrades have created a sound environment for the automotive market, and Porsche has fully seized the opportunity. Our diversified product matrix, which includes fuel, pure electric and hybrid models, is highly compatible with the differentiated subsidy policies in application in various regions," said Jojo Tang, vice president of Public Relations and Press at Porsche (China) Motors. Ltd., in an interview with China Media Group (CMG).

"Beijing has kept rolling out trade-in subsidies since September 1 last year. As a matter of fact, we have clearly felt that more customers are trading in their old cars for our new models. During the third and fourth quarters of last year, about half of our cars were sold under the trade-in program. And after the municipal government's announcement on NEV passenger car license quotas, we still expect to see our sales under the trade-in program to exceed 40 percent," said an employee at a Tesla showroom in Beijing.

Apart from the increasing sales in the auto sector, other big-ticket consumer goods like home appliances and furniture have also witnessed a consumer spending boom, with Suning.com, a major retailer in China, reporting a surge in the sales of home appliance brands from manufacturers involving various ownership structures since last September.

"Since the entry into effect of the state subsidy policies last year, the sales in our store has increased significantly, with a year-on-year growth rate of 29 percent, which is quite high. In terms of brands, the domestic brands have been going neck and neck with some joint ventures and foreign brands. For instance, the sales of Siemens, Panasonic and Samsung products have grown notably by 41 percent, 35 percent and 30 percent respectively from January to May," said Shang Hongyu, manager of a Suning store in Beijing.

According to Lyu Yue, executive dean of the Academy of Global Innovation and Governance at Beijing's University of International Business and Economics (UIBE), part of the reason that the stimulus measures are paying off is that Chinese and foreign firms have been treated as equal market players.

"On the one hand, the combination of state subsidies and preferential policies offered by enterprises has effectively boosted consumption upgrading and helped foreign brands accelerate their growth in some key areas. On the other hand, the policies have made clarified that domestic and foreign enterprises are treated as equal players, which ensures that foreign investors can participate in the formulation of subsidy application standards and other key policy-related areas, just like their Chinese counterparts. This has not only enhanced the confidence of foreign investors in participating in China's high-quality economic development, but also encouraged them to step up investment in China," Lyu said.

In December 2024, the German Chamber of Commerce in China released its 2024/2025 Business Confidence Survey, revealing that a staggering 92 percent of member companies are keen to continue operations in China and a half of them intend to expand their presence here in the coming two years.

Tang, from Porsche (China) Motors. Ltd., said that Porsche Ventures, in partnership with China International Capital Corporation (CICC), has launched its first Venture Capital fund in China and completed its filing with the Asset Management Association of China. Through this fund, Porsche Ventures aims to engage more flexibly with the growth of Chinese startups and actively drive technological advancement in the automotive industry.

"Porsche has been continuously deepening its presence in the Chinese market by taking advantage of favorable policies. The CICC Porsche Fund, jointly established by Porsche Ventures and CICC, completed its first round of investment here in March this year, focusing on the field of intelligent driving technologies. We will move our research and development center to a new location in Shanghai in the second half of this year," she said.

China's consumer spending stimulus efforts offer shot in arm for foreign firms

A new round of trade-in subsidy program is energizing China's consumer market these days, with provinces across the country seeing a surge in demand for cars, home appliances and digital devices.

In north China's Shanxi Province, the new trade-in subsidy program, which started on January 9, has further helped boost sales in home appliances and digital devices which are covered by the new round of subsidies.

To enjoy the subsidies, six types of home appliances, including refrigerators and washing machines, must meet national Level 1 energy-efficiency or water-efficiency standards. Digital and smart products include four types, such as mobile phones and tablets, with a sales price cap of 6,000 yuan (about 800 U.S. dollars) per item.

In both categories, subsidies are set at 15 percent of the final transaction price. For home appliances, the maximum subsidy is 1,500 yuan per item. For digital products, the cap is 500 yuan per item. Each consumer can receive a subsidy for one unit in each category.

Neighboring Shanxi, Hebei Province kicked off the year of 2026 with the new round of trade-in subsidy program starting on January 1.

The subsidies cover automobiles, home appliances, and digital products. Individual consumers who purchase designated Level 1 energy-efficiency appliances or eligible digital products priced at no more than 6,000 yuan can receive subsidies equal to 15 percent of the transaction price. The maximum subsidy is 1,500 yuan per appliance and 500 yuan per digital or smart device, with each person limited to one subsidized item in each category.

Data showed that from Jan 1 to 9, Hebei's home appliance trade-in program alone disbursed more than 130 million yuan in subsidies, driving sales of over 920 million yuan.

In east China's Jiangsu Province, the new trade-in subsidy program, taking effect for two weeks, has brought the province a boom in trade-in.

At a local 4S store in Jiangsu's Suqian City, showroom traffic has spiked as salespeople walked customers through the new benefits from the trade-in subsidy program.

"Under the scrappage-and-replacement scheme, customers who buy a new energy vehicle (NEV) can receive a subsidy worth 12 percent of the vehicle price, capped at 20,000 yuan (about 2,860 U.S. dollars). For combustion-engine cars, the subsidy is 10 percent, with an upper limit of 15,000 yuan. For trade-ins, NEVs are able to receive a subsidy worth 8 percent of the vehicle price, up to 15,000 yuan, while combustion-engine cars will receive a 6-percent subsidy, with a cap of 13,000 yuan," said Sun Yue, a saleswoman at the store.

In the home appliance sector, Jiangsu's policy this year stipulates that only products that meet China's Level 1 energy-efficiency standard are eligible for subsidies. The scheme covers six major categories, including refrigerators and washing machines.

Consumers who purchase qualifying appliances can receive a subsidy equal to 15 percent of the final retail price, up to a maximum of 1,500 yuan per item. Each person is limited to one subsidized unit per product category.

Four types of digital and smart products, such as mobile phones and tablets, are eligible for a 15-percent subsidy capped at 500 yuan per unit, with a retail price no more than 6,000 yuan.

"With the national subsidy policy back in place this year, I went to the store to check what discounts I could get. It knocked 500 yuan off the price. [The discounted price is] very reasonable," said Wang Kang, a resident of Jiangsu's Xuzhou Province.

To enhance the shopping experience for consumers, many retailers are pairing subsidies with "one-stop" services that combine the delivery of new products with on-site collection of old ones.

"After consumers place an order for new home appliances, our staff will schedule a time to pick up the old units. Recycling the old appliance can also further offset the purchase price of the new one," said Yang Jie, a sales supervisor at a major home appliance company.

China's new trade-in program sparks consumption boom