＂Trade in the old for the new＂ activates the market ＂a pool of spring water＂

It is beneficial to the present and the long term.

"Trade in the old for the new" activates the market "a pool of spring water"

□ Our reporter Hu Lizhen

Consumption is a powerful engine of economic development, which is connected with the macro-economy at one end and thousands of households at the other. Recently, the central level has focused on giving play to the role of consumption, continuously making arrangements for large-scale equipment renewal and "trade-in" of consumer goods, and playing a policy "combination boxing".

The Central Economic Work Conference held at the end of last year proposed to promote large-scale equipment renewal and "trade-in" of consumer goods by improving standards such as technology, energy consumption and emission. The fourth meeting of the Central Committee of Finance and Economics held on February 23 this year studied the issue of large-scale equipment renewal and "trade-in" of consumer goods, and pointed out that the implementation of large-scale equipment renewal and "trade-in" of consumer goods will effectively promote investment and consumption, which will benefit both the present and the long term.

The the State Council executive meeting held on March 1st deliberated and adopted the Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods (hereinafter referred to as the Plan). This the State Council executive meeting is a concrete implementation of the deployment of the Central Economic Work Conference and the Fourth Meeting of the Central Financial and Economic Committee, which means that this year’s consumption promotion policy will be launched in advance in key areas, which will promote the breakthrough of the "old-for-new" difficulty and activate the market.

Why is "trade-in" important?

At present, China’s economy is generally on the rise, but the influence of insufficient effective demand still exists. As an important part of effective demand, the recovery of consumption is of great significance to the annual economic performance. Among them, the consumption of durable goods, especially bulk durable goods, has the characteristics of high unit price and large proportion of total consumption, so it is one of the important graspers to stabilize consumption and promote consumption.

According to Sheng Chaoxun, director of the Strategic Policy Office of China Macroeconomic Research Institute, consumption is the end of social reproduction and the starting point of a new round of reproduction. Promoting large-scale equipment renewal and "trade-in" of consumer goods will stimulate the market to form new demand for large-scale production equipment and household appliances, help expand consumption, and smooth and accelerate the national economic cycle.

At present, the high-end, intelligent, green and digital manufacturing industry has become a general trend. Promoting large-scale equipment renewal and "trade-in" of consumer goods can promote the upgrading of industrial chain and the quality of end products. Sheng Chaoxun believes that, more importantly, "trade-in" will continue to expand market capacity and market space, so that various new technologies can compete and grow, and the domestic market will become an incubator, accelerator and amplifier of new quality productivity.

To stimulate consumption, there are many policies to focus on. The traditional demand stimulus policy usually acts directly on the increment, but this "trade-in" shows the adjustment of the policy idea of "mining the increment from the stock" Luo Zhiheng, chief economist and dean of the research institute of Yuekai Securities, said that the traditional stimulus policy has a limited effect due to factors such as high leverage ratio of enterprises, high market penetration rate of durable consumer goods and high household ownership. From the perspective of industrial transformation and upgrading and green economic development, the stock equipment of enterprises and residents has great room for upgrading, which will promote the continuous increase of the proportion of advanced production capacity, and more high-quality durable consumer goods will enter residents’ lives, and waste resources will be recycled.

Who will benefit from "trade-in"

According to media reports, recently, Ms. Lin, a consumer in Hunan Province, replaced several household appliances such as air conditioners, washing machines and water heaters in the form of "trade-in". These old household appliances that have been used for more than 10 years have been converted into cash and recycled by manufacturers.

Like Ms. Lin, with the financial support provided by the central finance, local governments and enterprises, many consumers will benefit from the "trade-in" policy. Ma Wei, vice chairman of the Presidium of the Council of China Household Electrical Appliances Service Maintenance Association, believes that green, intelligent, new technologies and experienced products and services can be provided to consumers through "trade-in" to meet their needs for high-quality life; At the same time, replacing those old products with "trade-in" can also eliminate the security risks caused by their "extended service".

According to data from the Ministry of Commerce, in 2023, the number of cars was about 340 million; Refrigerators, washing machines, air conditioners and other major categories of household appliances have more than 3 billion units. In 2023, the number of scrapped cars in China has reached 16.8 million, and the number of scrapped household appliances is expected to exceed 200 million. In recent years, the scrap volume of household appliances and automobiles has gradually increased, and the market potential is huge.

The "trade-in" policy will accelerate the scrapping of household appliances, automobiles and other products, release market demand and bring benefits to related industries. According to the Capital Securities Research Report, it is expected that a new round of household appliances "trade-in" will promote the implementation of the consumption policy, which will not only upgrade residents’ old household appliances, but also accelerate the increase in the number of range hoods, air conditioners and other categories in rural areas. People in the automobile industry said that the "trade-in" policy will further stimulate the demand for automobile replacement, which will bring more opportunities for self-owned brand cars to increase sales; At the same time, the active replacement policy can promote consumers to replace higher-level models, and the profitability of automobile enterprises is expected to be improved.

How to promote "trade-in"

From the previous experience of implementing the "trade-in" policy, most consumers actively support the policy and have a high degree of participation. At present, some enterprises and consumers are not willing to update equipment and "trade-in" consumer goods. The reasons are: first, the equipment can still be used normally and there is no need to change it; second, it needs to pay extra fees for replacing it.

Based on this situation, promoting the "trade-in" policy requires the coordinated support of fiscal and monetary policies, and fully mobilizes the enthusiasm of enterprises and consumers through incentive measures.

The "Proposal" clarifies the principle of "market-oriented and government-guided", which is to establish a clear market orientation for "trade-in" and avoid making the policy "one size fits all" and "sports", which will lead to the government’s squeeze on the market. Through policy guidance, business entities and consumers can decide whether to change or not according to their needs. This kind of "trade-in" is sustainable with the support of business logic, which is conducive to improving the efficiency of financial resources and avoiding new overcapacity that may lead to it.

"Trade-in" is not simply replacing the old with the new, but also taking into account the whereabouts and disposal of the replaced old products. The fourth meeting of the Central Financial and Economic Committee pointed out that large-scale recycling should be promoted, and the development of "trade-in+recycling" logistics system and new model should be strengthened. The "Program" also makes it clear that it is necessary to implement the overall saving strategy, promptly establish and improve the recycling system, promote the remanufacturing of waste equipment, and improve the level of resource recycling.

Guan Lixin, a researcher at the Institute of Circulation and Consumption of the Research Institute of the Ministry of Commerce, believes that improving the recycling system of renewable resources such as used household appliances is conducive to improving the life cycle service of durable consumer goods and solving consumers’ worries; On the other hand, it can also improve the efficiency of resource recycling and optimize the "trade-in" consumption environment.

To promote a new round of large-scale equipment renewal and trade-in of consumer goods, it is necessary to coordinate production, supply and marketing, upstream and downstream, government, enterprises and people, online and offline, and make comprehensive policies. Experts said that under the guidance of the government, we can "dance" with market demand, "coexist" with high-quality development, and "trade-in" to realize the two-way development of policy and market.

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