Chen Lili, an employee at a Beijing-based online company, recently purchased a new iPhone 16 (256 GB) from Chinese online retailer JD.com. Thanks to newly introduced subsidies for digital products and additional coupons from the JD membership program, she saved 1,000 yuan ($137) off the original retail price of 6,999 yuan ($960).

"The new policy came at just the right time because I was planning to buy a new phone. The process to claim the subsidies was straightforward and easy to follow," Chen said. She used the China UnionPay card payment platform to access these subsidies. China UnionPay is the country's sole bank card network operator.

Starting January 20, Chinese authorities began offering subsidies for purchasing digital products such as mobile phones, tablets, wristbands and smartwatches as the country expanded its consumer goods trade-in program, which covers both domestic and foreign brands.

As of February 8, some 20.09 million consumers had applied for these subsidies, leading to the purchase of 25.41 million digital products since the subsidy program was launched, according to the Ministry of Commerce (MOFCOM).

Furthermore, China UnionPay reported 6.27 million subsidized transactions during this period, with a total sales value of 20.58 billion yuan ($2.8 billion).

"As China has become the world's largest mobile phone market, the trade-in policy will drive the upgrading of the electronics manufacturing industry," Pan Helin, a researcher with the International Business School at Zhejiang University, told Beijing Review.

Policy support 

As part of broader efforts to boost domestic consumption and promote sustainable consumer behaviors, China introduced an action plan in March 2024 to initiate large-scale equipment renewals and trade-ins of consumer goods—almost 15 years after the last round of new-for-old policies. According to data from MOFCOM, the trade-in scheme impacted sales, generating an increase of 920 billion yuan ($126 billion) in automobile sales and 240 billion yuan ($32.94 billion) in home appliance sales during 2024.

As of late 2023, the number of mobile phone subscriptions in China had exceeded 1.7 billion. In the first 11 months of 2024 alone, the country produced more than 1.5 billion mobile phones and launched 393 new models, Xu Wenli, an official with the Ministry of Industry and Information Technology, told a press conference on January 16.

Under the updated trade-in plan for this year, digital products priced below 6,000 yuan ($823) will receive a one-time subsidy covering 15 percent of the product's sales price after the retailer's discount. Each consumer can receive a maximum subsidy of 500 yuan ($68) per item, with a limit of one subsidized item per category for each customer.

In addition to the digital product subsidy policy, MOFCOM on January 20 announced that the trade-in plan for home appliances would be expanded this year, increasing the number of eligible categories from eight in 2024 to 12. Every consumer can receive a subsidy for one item of each type of product, with the subsidy for each item not exceeding 2,000 yuan ($274). Specifically, for air conditioners, consumers can receive subsidies for up to three units per person.  

A Beijing-based consumer surnamed Zhang told Beijing Review that she bought a television from JD.com in January, using subsidies and coupons. The final cost for the television was 4,190 yuan ($575), down from the original price of 5,298 yuan ($727). She added that the subsidy was a major incentive for her purchase.

Data from All View Cloud (AVC), a Chinese big data service provider, indicated that TV sales in China saw a slight decline of 1.8 percent year on year in 2024. However, AVC projected that the subsidy policy will continue to drive TV consumption upward throughout 2025.

The subsidies have also sparked increased enthusiasm for purchasing cars. In late 2024, U.S. carmaker Tesla's China branch launched a promotional campaign offering customers a reduction of 10,000 yuan ($1,370) on the final payment for in-stock Model Y vehicles. Also, a five-year zero-interest financing plan was available until January 31, along with trade-in subsidies, allowing buyers to save at least 50,000 yuan ($7,000) on one electric vehicle purchase.

According to Tesla, the recent promotional offers enabled consumers in China to purchase the Model Y at the lowest prices ever seen in the market.

To encourage consumption, multiple local governments have introduced trade-in subsidies. In 2024, the Central Government raised 150 billion yuan ($20.6 billion) through ultra-long-term special treasury bonds—those with terms of more than a decade—to support local trade-in programs. 

Over 10 localities, including Hainan Province in south China and Hubei Province in central China, have announced plans to extend their trade-in subsidy policies this year. The commerce department of Hainan issued a notice stating it will continue to offer trade-in subsidies for home appliances, home decoration and furnishings, as well as policies for trading in old automobiles and electric bicycles.

Similarly, in Hubei, trade-in subsidies that took effect on January 1 expanded the eligible categories of smart appliances from eight to 12. This expansion added 77 new items, including portable chargers, cameras, pet feeders and hair dryers.

Boosting circulation 

The expanded trade-in policy is expected to do more than just boost consumption. According to Xu, if 10 percent of Chinese mobile phone users participate in the phone purchase subsidy program, this could lead to an additional 100 billion yuan ($13.7 billion) in new device sales.

Mobile phones are made up of hundreds to thousands of components, including integrated circuits, sensors, display elements, batteries, connectors and mechanical parts. Xu said the sales upsurges driven by the subsidy will not only increase demand for new devices but also benefit the upstream supply chain and expand related businesses.

Pan added that while home appliances and cars in domestic households may not be replaced within a decade, consumers tend to buy new digital products every two to three years. To meet the demand created by the policy, tech companies will need to ramp up production and introduce new technologies, like artificial intelligence, to transform the industry.

Pan also pointed out that the recycling of used goods still needs improvement. "Low returns have dampened people's enthusiasm for replacing old items, as the costs of recycling home appliances, including transportation, may fall on consumers," he said.

However, the market for second-hand digital devices is becoming more vibrant. Many brands have implemented trade-in policies to facilitate the recycling of their products into new materials.

The recycling and disposal of used digital goods present new opportunities. Brands need to develop more sophisticated recycling systems to encourage sustainable practices, according to Pan. BR

(Print Edition: Renew and Reap) 

Copyedited by Elsbeth van Paridon 

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