The global economic landscape has faced numerous challenges, including supply chain disruptions and fluctuations in consumer confidence. In response to these external pressures, political leaders in Shanghai, known as a leading economic hub in China, have recognized the importance of promoting a resilient and dynamic domestic market. In fact, a series of new incentives have recently been presented aimed at encouraging the renewal of equipment, promoting the trade of consumer goods and, ultimately, pushing growth in consumption. These measures are expected to stimulate the market, drive industrial redevelopment and improve the city’s overall economic resilience. By focusing on the renewal of equipment and the exchange of consumer goods, the city aims to stimulate innovation and technological progress, while addressing concerns regarding consumer confidence.
To implement the requirements of the Action Plan of the State Council for Promoting Large-Scale Equipment Renewal and Exchange of Consumer Goods (Guo Fa (2024) No. 7), issued by the State Council of China on March 13 2024, the Shanghai Municipal People’s Government on April 30, 2024 released the “Shanghai Action Plan for Promoting the Renewal of Equipment on Large Scale and the Exchange of New Consumer Goods (2024-2027)” (“Action Plan”). The main objective of the Action Plan is to strive to be at the forefront of China by 2027, strengthening standard guidelines and policy guarantees, promoting equipment renewal in ten sectors such as industry, energy, construction and transportation, and trading in four categories of consumer goods including automobiles, appliances and home furnishings.
According to the Action Plan, actions will be implemented in Shanghai in four areas: upgrading equipment, trading in consumer goods, recycling and utilization, and strengthening policy support in ten sectors including industry, energy, construction, transportation and medicine. , for equipment renewal and trading of four kinds of consumer goods (automobiles, household appliances, home decoration and electric bicycles), promoting the development and transformation of high-quality, intelligent and green industry, improving the level of safety and urban infrastructure intelligence, and introducing more high-quality consumer durables into residents’ lives.
The main content of this Action Plan includes:
• Promote the renewal of equipment: encourage businesses to adopt new technologies and processes, focusing on green, safe and low-carbon production, digitalisation and intelligentisation, to upgrade and replace existing equipment, switch to new greener, smarter and more efficient products and improve production efficiency and product quality.
• Implement trade in consumer goods:introduce trade subsidy policies in the automobile, household appliances, household consumer goods and electric bicycle sectors to encourage consumers to recycle old consumer goods in exchange for new products and reduce resource waste by promoting transformation of the structure of consumption towards an ecological, intelligent and high-end dimension.
• Improve the recycling system: enhance the recycling network of waste products and equipment, support the circulation and trade of second-hand goods, improve the rate of recycling of resources and maximize the use of resources, reducing waste.
• Strengthen support for policies: Provide financial subsidies, tax incentives and other types of support policies, including some financial subsidies or tax breaks to consumers and businesses participating in trade, to reduce the costs of renewing equipment and consumer goods. At the same time, formulate and improve relevant standards, strengthen market supervision, and ensure product quality and transaction security in the process of trade.
Currently, in order to refine and clarify the specific tasks and related supporting policies in various sectors, the Departments of Economy and Information Technology, Culture, Tourism, Trade and Finance have issued relevant supporting policies in the sectors industry, cultural tourism and consumer goods. In other areas, special action plans are also being formulated by the relevant departments, and we will continue to monitor them.
These initiatives not only offer immense opportunities for local businesses, but also for European companies operating in China. The focus on refurbishing equipment and trading in consumer goods aligns perfectly with the strengths and expertise of many European companies, often specializing in advanced manufacturing, technology and sustainable solutions. By participating in the programme, European companies can showcase their innovation and expertise, while benefiting from the increased demand and visibility generated by incentive measures.
As for the already published support policies, in the industrial sector, seven departments, including the Shanghai Municipal Commission for Economic and Information Technology, published on May 31, 2024 the “Shanghai Special Action Plan to Promote the Large-Scale Renewal and Expansion of Innovative Equipment and Products in the Industrial Field”, proposing renewal actions of advanced equipment in key areas and other measures. In the culture and tourism sector, the Shanghai Municipal Bureau of Culture and Tourism and other departments released the “Action Plan of Shanghai Municipality to Promote Equipment Renewal in the Culture and Tourism Sector” on July 3, 2024. of Tourism (2024-2027)”, which outlines the key objective of completing a cumulative investment of RMB 2 billion in the renovation of cultural and tourism facilities by 2027. It also proposes encouraging special funds for tourism and creative culture to increase support for projects involving the renewal of equipment.
On September 3, 2024, the Shanghai Municipal Development and Reform Commission issued the Shanghai Implementation Plan to Further Intensify Efforts in Promoting Consumer Goods Trade, in order to strengthen efforts to stimulate consumption vitality and further promote high-quality economic and social development. This Implementation Plan is based on the real situation in Shanghai, and in line with the general idea of ”increasing volume, raising standards, expanding the scope and optimizing the process”, focuses on support for scrapping and automobile renovation, the replacement and renovation of passenger cars for individual consumers, the exchange of household appliances and electric bicycles, the local transformation of old houses, kitchens and bathrooms, and the purchase of items and materials used in the renovation of housing for the elderly , in order to promote smart home consumption.
In addition to the above-mentioned plan, the Shanghai Municipal Government deliberated and approved the “Shanghai Service Consumption Voucher Issuing Plan” before China’s “Golden Week”, deciding to issue service consumption vouchers “Happy · Shanghai” for four areas: catering, accommodation, cinema and sports. This round of service consumption vouchers invested 500 million RMB from Shanghai financial funds, and according to the proportion of consumption in various sectors and the needs of citizens, the distribution of consumption voucher funds is as follows: RMB 360 million for catering, RMB 90 million for accommodation, RMB 30 million for cinema and RMB 20 million for sports. The vouchers mentioned above were sold out immediately after they were issued
Facts have shown that the policies have had a good effect in promoting consumption. Shanghai’s consumer market was active during the National Day “Golden Week” (September 30 to October 6), with online and offline consumption reaching RMB 67.6 billion, outlining an increase of 3.2 million. %. The total offline passenger flow in 36 major commercial districts reached RMB 34.49 million, an increase of 9.8% over the previous year, and the passerby flow of 25 commercial districts increased, while the flow of people from 16 districts, such as Huaihai Middle Road, Zhenru and North Bund, grew by more than 10% compared to the previous year. The offline consumption of tourists from other provinces in Shanghai was 15.1 billion yuan, an increase of 5.2% from the previous year during the “Golden Week” of 2023. The number of transactions carried out was of RMB 42.931 million, an increase of 10.7% compared to the same period in 2023.
The trade policy for home appliances has a significant effect, with average daily subsidized sales for eight categories of home appliances in the country reaching RMB 54.07 million, an increase of 140.0% compared to before the holiday. The average daily sales of subsidies for furniture, home decoration and elderly products in the city were RMB 23.14 million, representing an increase of 228.7% compared to before the holiday. Since the distribution of vouchers, the booking volume, passenger flow and unit price of catering businesses have increased significantly. During the “Golden Week”, offline restaurant consumption in Shanghai reached 8 billion yuan, a double-digit increase from the previous year.
For European companies operating in China, this incentive package represents a unique opportunity to expand their presence and access new markets. By taking advantage of the incentives provided by the programme, European companies can strengthen their presence in China’s growing economy, improve their product offerings, strengthen their distribution networks and consolidate relationships with local consumers. Furthermore, by participating in the programme, European companies can demonstrate their commitment to the Chinese market, enhance their reputation as innovative and sustainable businesses and build stronger relationships with local partners and stakeholders.
Overall, Shanghai’s proactive approach to economic stimulation through targeted incentives demonstrates its commitment to fostering a robust and forward-looking economy, which represents a significant step in fostering economic growth and promoting sustainable development.
By focusing on the renewal of equipment and the exchange of consumer goods, the city not only aims to amplify local consumption, but also promote technological progress and sustainability. These measures not only benefit businesses and consumers, but also contribute to the city’s overall economic prosperity and environmental sustainability. As these measures roll out, all eyes will be on Shanghai to gauge the effectiveness of these initiatives and the potential for broader nationwide implementation.
By: Attorney Carlo Diego D’Andrea, Vice President of the European Union Chamber of Commerce in China
