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The Star
2 days ago
- Business
- The Star
‘Hefty price tag' for subsidy scheme: is China's consumer boost sustainable?
For months, consumers across China buying everything from iPhones to cars and washing machines have enjoyed steep discounts – courtesy of the government. This vast subsidy programme has played a key role in boosting China's consumer spending this year, helping the economy remain relatively robust even amid an unprecedented trade war with the United States. But in June, some of those offers suddenly disappeared. In the eastern Jiangsu province, local authorities stopped issuing vouchers for online purchases of home appliances. Around the same time, several other provinces suspended their trade-in programmes for cars and appliances, citing depleted funds. The cancellations were the first sign that a reckoning may be approaching over China's consumption-boosting policies, which have succeeded in their main goals – but come with a hefty price tag. Last week, Beijing reaffirmed its support for the national trade-in scheme for durable goods, pledging that the rest of the 300 billion yuan (US$41.8 billion) funding would be allocated to local governments before the end of the year, with the next two rounds of funding set to be issued in July and October. On Thursday, Li Chao, deputy director of the National Development and Reform Commission's Policy Research Office, said the government would formulate monthly and weekly plans to monitor the utilisation of those funds. 'This will ensure the orderly implementation of the consumer goods trade-in policy throughout the year,' she added. Yet, economists are increasingly questioning the sustainability of the policies. Though the sums involved are not a big burden for China's central government, some argue the cost of the programme may be putting more pressure on the finances of local authorities, which are already struggling under high debt levels. Beyond that, there is also concern about the policies' diminishing return on investment. Some worry the trade-in programme may simply be pulling forward future demand, meaning the current spending binge may be followed by an inevitable hangover once the policies come to an end. All of that has led to a growing debate over how long Beijing should continue funding the programme, especially if the US tariff war grinds on past this summer. There's the risk that sentiment simply weakens again when the rebates run out 'The trade-in scheme is a good short-term option, but it assumes that demand recovers and consumer confidence strengthens,' said Ben Simpfendorfer, a Hong Kong-based partner at the management consulting firm Oliver Wyman. 'These trade-in schemes work best when they're accompanied by structural reform that focuses on the medium term. Otherwise, there's the risk that sentiment simply weakens again when the rebates run out,' he added. The headlines figures suggest the trade-in programme has made a real impact this year. During the first five months of 2025, China's retail sales grew 5.0 per cent year on year, up from 3.8 per cent in the last quarter of 2024, despite a turbulent global economy. But economists from Nomura forecast that retail sales growth would fall to just 3.1 per cent year on year in the second half of 2025, due to the inevitable 'payback' from the trade-in programme, a higher base from last year, and the new austerity rules for government officials that are expected to deal a blow to the catering sector. 'In addition to providing a one-off subsidy to consumption, Beijing might need to consider longer-term structural policies to support consumption,' they said in a report published this week. Reforms to the social security system – such as raising basic pension payments to low-income households and increasing subsidies for basic medical insurance – would be the most effective long-term policy moves to bolster consumption and reduce inequality, according to the report. Some economists also worry about the financial strain the consumer goods trade-in schemes could place on local governments, which are required to cover a percentage of the total subsidies: 5 per cent for China's western provinces, 10 per cent for the central provinces, and 15 per cent for the eastern provinces. Given the ongoing US-China trade negotiations, the policy should be expanded rather than halted Many local governments in China are already grappling with high debt levels and facing budgetary pressures due to a decline in income from land sales amid a downturn in the property sector. 'The overall pressure on local governments [from funding the trade-in schemes] is not too big, but for those poorest regions, they may genuinely lack the funds to cover this expense,' said Lu Ting, chief China economist at Nomura. However, Xue Qinghe, CEO of the private Guangdong-based think tank Zhibenshe, said the trade-in programme was unlikely to impose significant pressure on local governments, as it could also boost local tax revenues. 'From the current perspective of how the trade-in programme is supporting consumption, this policy remains positive. Coupled with the ongoing US-China trade negotiations, the policy should be expanded rather than halted,' Xue said. On Tuesday, Apple's official website in China showed that some of its products now benefitted from national subsidies worth up to 2,000 yuan, with the deals applying to purchases at the company's stores in Shanghai as well as online purchases with a Beijing shipping address. - SOUTH CHINA MORNING POST
Yahoo
24-06-2025
- Business
- Yahoo
Turfan, Xinjiang: Electricity Ensures Steady Development of a 3-Billion-Yuan Energy Hub
TURFAN, China, June 24, 2025 /PRNewswire/ -- On June 24, the temporary construction phase of the No. 1 Open-Pit Mine in the Kumtag Mining Area, located in Shanshan County, Turfan City, Xinjiang, officially commenced. This marks the entry of this key project under the "14th Five-Year Plan" of the Xinjiang Uygur Autonomous Region into the substantive construction stage. The project is a priority pilot development mine jointly approved by the National Development and Reform Commission and the Ministry of Ecology and Environment. It also represents a key initiative that both Hunan and Xinjiang are actively advancing. The designed annual production capacity of the No. 1 Open-Pit Mine is 10 million tons, with a total investment of 4.829 billion yuan and a construction period of 24 months. Upon completion and commissioning, the project is expected to generate approximately 900 job opportunities annually, achieve an output value exceeding 3 billion yuan, and contribute nearly 600 million yuan in taxes and fees each year. Furthermore, it will promote the clean and efficient utilization of coal resources and support the development of the coal chemical industry in Turfan City. According to the plan, following the completion of temporary facilities, infrastructure projects such as road access, power supply, water supply, and site leveling ("three accesses and one leveling") within the mining area will be initiated sequentially. Efforts will also be made to advance integrated initiatives encompassing coal mines, coal-fired power generation, and coal chemical industries, thereby facilitating local resource conversion and industrial upgrading. To support the timely implementation of the project, State Grid Turfan Power Supply Company has established a dedicated service team and set up a regular communication mechanism with the project developer. The company has proactively planned the Shaxi 220-kilovolt transmission and substation project and continues to monitor the progress of the mine's construction to ensure the timely completion of supporting power infrastructure. These measures aim to create favorable conditions for the coordinated development of energy resources between Hunan and Xinjiang. View original content: SOURCE State Grid Turfan Power Supply Company Sign in to access your portfolio
Time of India
18-06-2025
- Automotive
- Time of India
Some Chinese cities pause car-buying subsidies as funds run out
At least six cities and municipalities across China have suspended trade-in subsidies for car buyers in June, according to Reuters' review of government announcements, which could slow new car sales in the world's second-biggest economy. Notices from governments in Zhengzhou and Luoyang blamed the subsidy pause on the first round of funding allocated by Beijing for the programme running out, while Shenyang and Chongqing said the suspension was due to adjustments to improve capital efficiency. The northwestern region of Xinjiang issued a similar suspension. China's government has leaned on subsidies for big-ticket items, including cars, home appliances and some electronics to get people spending as consumer sentiment in the country remains sluggish amid a prolonged property slump and concerns over wage growth and unemployment. The programmes have been embraced with some enthusiasm. As of May 31, there were more than 4 million applications submitted this year for car-specific trade-in subsidies, according to the country's Ministry of Commerce. Chinese retail sales data for May released earlier this week surprised on the upside with subsidies cited as one reason for the higher-than-expected 6.4% growth. While there has been no official announcement about when more funds from the central government will be released for programmes, China's National Development and Reform Commission and Ministry of Finance have said the subsidies would continue throughout 2025, leading analysts to expect new funds for the third quarter to be made available from July. The subsidy programme has also met with controversy, however, particularly in the auto sector. China's auto industry, the world's largest, has attracted criticism from regulators over a deepening price war that has sapped the sector's profitability. Official media in China's Henan province, where Zhengzhou is the capital, last week reported, citing unnamed sources, that China's central government had taken note of some loopholes in the subsidy schemes and would look to make adjustments. One of the major issues identified by Chinese media and regulators is so-called " zero-mileage used cars ", which refers to the practice of selling brand new cars as heavily discounted second-hand vehicles to get rid of inventory. The report in Henan government-owned newspaper Dahe Daily added that sales of "zero-mileage used cars" were one of the key factors leading to subsidies being used up ahead of expectations, necessitating the suspensions. Some businesses were disguising new or nearly new cars as used cars that they could trade in to obtain the subsidies, the newspaper said. The People's Daily, a national newspaper that often signals the positions of China's top leaders on a variety of issues, also called for a crackdown on the zero-mileage used cars, weeks after Great Wall Motor's Chairman Wei Jianjun publicly condemned the practice. China's industry ministry in early June summoned automakers to a meeting where it called for the sector to halt its price wars, Reuters reported last week.
Time of India
13-06-2025
- Business
- Time of India
China solar industry to address overcapacity challenge but turnaround far off, experts say
Shanghai: Solar manufacturing company heads in China, grappling with losses and tariffs on exports to the U.S., called for an end to a price war and a solution to overcapacity in the sector, but industry participants predict a slow turnaround. China's solar manufacturers have reported losses this year as U.S. President Donald Trump's trade war put further pressure on demand within the industry. Losses in the photovoltaic manufacturing value chain reached $40 billion last year, while for the industry as a whole - including firms' other business lines - totalled $60 billion, Trina Solar Chairman Gao Jifan said. The Chinese government and industry were working to address the overcapacity and breakneck competition that have pushed most major producers into the red, Gao told the SNEC PV+ Photovoltaic Power Conference and Exhibition in Shanghai this week. The National Development and Reform Commission (NDRC), China's state planner, held an online meeting in February calling for a ban on new production, Gao said, but new capacity has nevertheless been built in recent months. NDRC did not immediately respond to a faxed question on the matter. Zhu Gongshan, chairman of polysilicon and module producer GCL, called for a "clear out" of the sector through mergers and a paring back of production capacity. China was also moving away from reliance on a single market, Zhu said, referring to growth in new markets outside China in response to tariffs and other trade barriers. Chinese manufacturers have been rapidly expanding in the Middle East, and a module-producing firm said demand is set to grow in eastern Europe and South Asia. Solar manufacturing makes up less than two-thirds of Trina's business now and will fall to 50% or less in the next two to three years, Gao said, with a greater focus on product solutions and energy storage. Several experts told Reuters during this week's industry event that there is no hope for recovery in solar component prices this year. One procurement manager at a module producer in eastern China said two or three large factories would have to stop production for supply and demand to rebalance and support prices, unlikely in the near future.
Qatar Tribune
12-06-2025
- Business
- Qatar Tribune
China courts private tech firms to help drive next 5-year plan
Agencies China has signalled growing support for the private sector, as the head of the government department that oversees economic reform sat down with representatives of the tech industry to gather input ahead of Beijing's next five-year development blueprint, analysts said. Zheng Shanjie, chairman of the National Development and Reform Commission (NDRC), met leaders from five private enterprises to 'gather opinions and suggestions for the scientific formulation of the '15th Five-Year Plan', with a focus on technological innovation', according to a statement published by the NDRC on Tuesday. Zheng said private enterprises could play a crucial role in helping Beijing formulate its next plan, which will cover the years 2026 to 2030. The private sector 'possesses strong innovation momentum, great potential and abundant vitality', he added, making private companies 'a key force in developing new quality productive forces'. 01:29 The video player is currently playing an ad. You can skip the ad in 5 sec with a mouse or keyboard Since the start of the year, the Chinese government has struck an increasingly private-sector-friendly tone. In February, President Xi Jinping held a rare high-level meeting with business heads – the first since 2018. In May, a new private sector law came into effect, promising fairer market competition, equal market access and stronger legal protections. Peng Peng, head of the Guangdong Society of Reform, a think tank affiliated with the provincial government, said the 15th Five-Year Plan would 'focus on technology and innovation as engines [for development], which means it needs to promote new and future-oriented industries.' 'Private companies have a lot more advantages in this regard. They are the key driving force in innovation.' The five companies invited to attend the meeting were Moore Threads from Beijing, Zhejiang's Ant Group, BGI Genomics from Guangdong, Henan's Yinjinda New Materials and Sevnce Robotics from Chongqing. The firms were carefully selected to each represent a strategic emerging industry, encompassing semiconductors, the internet, biopharmaceuticals, new materials and artificial intelligence (AI), Peng said. 'From a geographic standpoint, they are from all four corners of China,' he added, with Beijing in the north, Zhejiang in the east, Guangdong in the south, Henan in the centre and Chongqing in the west. During the meeting, the business leaders asked the government to increase support in 'capital, talents, energy, data and other factors in the field of science and technological innovation'. In response, Zheng vowed the government would 'carefully study and incorporate suggestions from private companies' and provide more 'targeted policy initiatives' to support the private sector, according to the NDRC statement. 'This (increasing focus on private companies) is necessary. I'm in touch with some state-owned companies now, and they are all saying that their private counterparts are weathering the situation better,' Peng said. The draft of the 15th Five-Year Plan draft is expected to be presented for review and approval during the annual session of the National People's Congress in March 2026.
