Business · Economy · 1 hr ago
China’s consumer subsidies lose force as domestic demand slows
China is struggling to get households to spend more, even as exports and industrial production remain strong.
The People’s Daily, the ruling Communist Party’s newspaper, says a consumer subsidy program is becoming less effective over time.
The program, brought back in 2024, helps people replace old consumer goods with new ones.
Consumption grew more slowly in the first eight months of this year than in the same period last year, and retail sales rose just 0.4% in August from a year earlier.
The newspaper says people need higher incomes and greater confidence to spend, and recommends raising incomes for low-income households and improving wages and social security.
It also urges the government to spend more on public services such as education, health care and elder care, and to use funding and loan subsidies to encourage spending.
China has set a 4.5% to 5% growth target for the year, and the government has called for more lending and measures to boost domestic demand.
China’s People’s Daily said the effect of consumer trade-in subsidies is diminishing as domestic demand slows.
The newspaper said consumption growth in January-August was lower than in the same period a year earlier.
It called for measures to raise household incomes, expand public-service spending and strengthen policy support.
China’s retail sales rose 0.4% year on year in August, below market expectations.
The report comes as China continues to face weak domestic demand, investment and property activity.
- Who
- China’s People’s Daily, the ruling Communist Party’s newspaper, assessed the slowdown and recommended policy changes.
- What
- It said consumer trade-in subsidies are losing effectiveness and called for steps to support household consumption.
- When
- The commentary was published on October 13, 2026. It said consumption growth in January-August was below the same period a year earlier.
- Where
- China.
- Why
- The newspaper cited the diminishing impact of consumer trade-in subsidies and factors including volatility in international energy markets. It said consumption also depends on income, wealth and social expectations.
This story does not have two clearly opposing sides.
China reintroduced its consumer goods trade-in policy to stimulate domestic demand.
Consumption growth was lower than in the same period of the previous year, according to People’s Daily.
Retail sales rose 0.4% year on year, below market expectations.
People’s Daily said the trade-in policy’s effects were diminishing and called for measures to raise incomes and support consumption.
- Consumer trade-in policy
- Reintroduced in 2024
- Retail sales
- Rose 0.4% year on year in August
- Fixed-asset investment
- Fell 7.2% year on year in January-August
- Economic growth target
- 4.5%-5% for 2026
- Special domestic-demand fund
- 100 billion yuan
What people are saying
Consumption stimulus still faces many challenges
Consumption is a function of income and wealth, and consumption growth is also affected by social expectations
Sources
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