China to subsidise smartphone purchases in bid to lift spending

BEIJING – China will expand consumption subsidies to cover smartphones and other electronics, in a step to promote domestic spending as external headwinds pick up.

A national trade-in programme that currently applies to home appliances and cars will broaden in 2025 to include personal devices like phones, tablets and smartwatches, officials from the nation’s top economic planning agency said in a briefing on Jan 3.

Chinese consumers in the post-Covid era have begun holding on to their smartphones longer, given a lack of exciting new features and general belt-tightening. As with cars and washing machines, investors hope incentives will revive the world’s largest smartphone market and drive sales for not just brands such as Huawei Technologies and Xiaomi, but also galvanise business on platforms popular with device fans like Alibaba Group Holding and JD.com.

The move is part of

China’s efforts to encourage consumption

to offset the effects of any new US tariffs on Chinese exports, which have been a key growth driver. For only the second time in at least a decade, top leaders in December 2024 made stimulating spending and domestic demand their top priority in 2025.

The government will “significantly” increase the sale of ultra-long special treasury bonds to fund the programme, which also encourages companies to upgrade their equipment, according to deputy secretary-general Yuan Da of the National Development and Reform Commission.

In late 2024, several provinces had started their own trade-in programmes for personal devices and phones, but a nationwide initiative could prove more effective.

The central government in July 2024 committed 300 billion yuan (S$56.2 billion) of funds raised from special treasury bonds to support the subsidies. Including local government efforts, the incentives led to a surge in sales of cars and home appliances starting from September 2024.

Subsidies for upgrading business equipment will also be expanded to cover areas including agricultural facilities, according to Mr Yuan. A specific plan for the programme’s expansion will be issued soon, he said.

China previously subsidised mobile phone purchases as part of a broad consumption stimulus plan that began in late 2007 to counter the impact of the global financial crisis. The programme targeted rural residents and also covered home appliances, computers and cars, before ending in 2013.
BLOOMBERG