China: 300 billion yuan of ultra-long-term special government bonds, strengthened support for equipment renewal and replacement of consumer goods

China's National Development and Reform Commission and Ministry of Finance announced “some measures relating to strengthening support for large-scale equipment renewal and replacement of consumer goods” on July 25. Under the same measure, it is said that ultra-long-term special government bonds (note 2) of 300 billion yuan (about 6 trillion300 billion yen, 1 yuan = about 21 yen) will be allocated in order to strengthen support (note 1) for equipment renewal and replacement of consumer goods.

Regarding support for equipment renewal, ultra-long-term special government bonds of 148 billion yuan were allocated to dedicated funds for large-scale equipment renewal (Note 3), and support targets were expanded to fields such as energy, electricity, and aging elevators in addition to industry, environmental infrastructure, transportation, logistics, education, culture/tourism, and medical care. Also, by applying for funds for ultra-long-term special government bonds, the requirement that “the total investment amount of the project does not fall below 0.1 billion yuan” will be eliminated, and equipment renewal for small and medium-sized enterprises will be supported. Furthermore, specific subsidy amounts were clarified for the renewal of aging ships, diesel trucks, agricultural machinery, new energy buses, and power batteries.

Regarding the replacement of consumer goods, support funds were determined according to the resident population of each region, gross regional product (GRP), ownership status of automobiles and home appliances, etc., and it was decided to focus on supporting the replacement of passenger cars, home appliances, and electric bicycles, remodeling and barrier-free used housing, and remodeling of plumbing equipment.

Also, based on the “Vehicle Replacement Subsidy Implementation Rules,” it is said that subsidies paid to replace passenger cars that meet the conditions will be raised, and when purchasing a new energy passenger car, it will be raised from the conventional 0.01 million yuan to 0.02 million yuan, and when purchasing a fuel-type passenger car with a displacement of 2.0 liters or less, it will be raised from the conventional 7,000 yuan to 0.01 million 5,000 yuan.

For the replacement of 8 types of home appliances: refrigerators, washing machines, televisions, air conditioners, computers, water heaters, household stoves, and range hoods, it was decided that 15 to 20% of the sales price and a maximum of 2,000 yuan per product would be subsidized (Note 4).

In the measures, in order to ensure effective implementation of support measures, in addition to clarifying the specific allocation of support funds and the burden ratio between the central government and local governments for each region, the management of ultra-long-term special government bonds was made strict, and it was decided that they must not be diverted to local government debt repayment, etc.

(Note 1) In order to expand investment and consumption, the State Council announced the “Action Plan to Promote Renewal of Large-Scale Equipment and Replacement of Consumer Goods” on March 13. In response to this, related policies have been launched one after another in each department of the central government and at each province/city level.

(Note 2) According to the government activity report for the 14th National People's Congress (NPC), ultra-long-term special government bonds will be issued over the next few years, used to implement important national strategies and develop priority security capabilities, and 1 trillion yuan will be issued in 2024. The Ministry of Finance announced the 2024 ultra-long-term special government bond issuance schedule on 5/13, and issued the first ultra-long-term special government bond on 5/17 (.

(Note 3) Ultra-long-term special government bonds of approximately 150 billion yuan will be directly allocated to local governments and used to support the renewal of aging trucks, agricultural machinery, new energy buses, power batteries, etc., and the replacement of consumer goods.

(Note 4) According to the “Energy Efficiency Label Control Valve Act,” there are “energy efficiency labels” from Class 1 to Class 5, which have the highest energy efficiency. A “water use efficiency label” is a label that displays information such as water use efficiency grades and water usage amounts. Under the same measures, 15% of the sales price will be subsidized when purchasing products certified as grade 2 or higher with an “energy efficiency label” or “water use efficiency label,” and 20% of the sales price will be subsidized in the case of products certified as grade 1 or higher.