SHANGHAI - CHINA will subsidise purchases of cars and home appliances to replace older models, expanding a program first introduced in rural areas to major cities, the government said on Tuesday in its latest move to stimulate the economy.

The decision by an executive meeting of the State Council is meant to pump up China's domestic demand, supporting domestic industries hit by a slump in demand for exports and encouraging use of more energy-efficient, less polluting cars and appliances, said a statement on the government's Web site.

Areas qualifying for the 'swapping old for new' subsidies, as they are dubbed, include Beijing, Shanghai, Tianjin and several provinces in China's affluent coastal regions. The earlier program focused mainly on boosting sales of small vehicles and appliances in the rural areas.

The plans were announced a day after the government outlined plans for revitalizing and restructuring China's light industries and its often loss-making petroleum refining sector.

Those plans, issued by the State Council, or Cabinet, late on Monday are meant to create about 3 million jobs.

The government gave no specific dollar amount for those programs, and it was unclear whether or not some costs are included in a 4 trillion yuan (S$857 billion) economic stimulus package announced late last year, which focused on construction projects.

But leaders had promised additional help if the earlier package failed to give the economy the oomph it needs to overcome the blow to its export sector from the global downturn.

According to the State Council's announcement, Beijing will spend a total of 5 billion yuan on subsidies to consumers who trade in older vehicles for new ones. It will devote 2 billion yuan to the appliance subsidy program, which will pay rebates of 10 per cent of the purchase price.

Expanding domestic demand is a top priority for Beijing, and the measures announced Tuesday reflect the leadership's determination to keep Chinese shoppers spending. So far, retail sales growth has remained in the double digits.

Economic data announced last week showed mixed trends, with exports plunging while investment soared, disappointing those who had seen signs a recovery might be looming in unexpectedly strong data for March. -- AP