BEIJING, Jan 8 (Reuters) - In a significant move to stimulate its economy, China has expanded its consumer trade-in scheme, incorporating various home appliances such as microwave ovens, water purifiers, dishwashers, and rice cookers. This initiative is designed to boost demand in the struggling household sector and comes alongside subsidies for digital goods like cellphones, tablet computers, and smart devices, which will receive a 15% subsidy this year, as reported by both Reuters and CNN.

According to a document from the country's top state planner and finance ministry, the government has set aside 81 billion yuan (approximately $11.05 billion) to support consumer goods trade-in initiatives, highlighting a broader strategy to reignite growth in the world's second-largest economy amid a persistent property crisis that has negatively impacted consumer wealth and spending.

Despite the government’s efforts to uplift the economy, the consumer sector continues to face challenges. As echoed by various analysts, there is an urgent need to enhance household spending. Xu Tianchen, a senior economist at the Economist Intelligence Unit, noted that the government’s total subsidies could double to 300 billion yuan in 2025, indicating a policy shift towards prioritizing consumption.

The trade-in scheme, which also allocated about 150 billion yuan from special treasury bonds last year to support the replacement of old appliances and vehicles, has reportedly yielded positive outcomes, with significant sales figures in the auto and appliances sectors. However, recent announcements have left investors cautious, as reflected in the 3.2% decline of China's consumer electronics stock index by midday.

Moving forward, Chinese officials, including Zhao Chenxin of the National Development and Reform Commission, have pledged to escalate funding for these initiatives significantly. They plan to announce exact funding figures during the upcoming parliamentary meeting in March.

Top leaders have committed to “vigorously” enhancing consumption and expanding domestic demand across multiple fronts this year. This includes measures such as wage increases for government workers to further stimulate consumer spending. Lynn Song, chief economist at ING, anticipates that supportive policies will bolster retail sales growth in 2025 compared to 2024, although household consumption recovery is contingent upon asset price stabilization and improved job confidence.

Additionally, the policy document indicates that funding will expand to include essential equipment in the IT and agriculture sectors, with special emphasis on high-end, smart, and green technologies. To facilitate this, interest rate subsidies on equipment upgrade loans will be arranged, alongside a 400 billion yuan low-cost relending facility organized by the central bank.

This strategic pivot by China marks a crucial step in navigating through ongoing economic challenges, focusing on revitalizing consumer confidence and spending by leveraging incentives for household goods.

For more detailed information, please refer to the original articles from Reuters and CNN.