China announced a notification regarding the promotion of replacement of home appliances, with the central government bearing 90% of the financial burden.

On August 24, the Ministry of Commerce and other four departments in China announced the "Notification on Further Advancing the Completion of Home Appliance Replacement Operations" (Commercial Procurement and Distribution Lateral Document (2024) No. 397). Based on the "Measures for Further Strengthening the Support for Large-scale Equipment Renewal and Consumer Goods Replacement" announced by the National Development and Reform Commission and others on July 25, it stipulates further details in order to promote the replacement of household appliances by advancing the coordination and cooperation between the central and local governments.

The eligible products for subsidies are eight types: refrigerators, washing machines, televisions, air conditioners, computers, water heaters, home stoves, and range hoods, which have been certified as Class 2 or above for "Energy Efficiency Label" or "Water Use Efficiency Label" (Note). The specific products will be determined by each region. The subsidies amount to 15% of the final sale price, with an additional 5% added for the purchase of Class 1 or higher products. Consumers can receive subsidies for each type of product, with a maximum amount of 2,000 yuan per product (approximately 0.04 million yen, 1 yuan = approximately 20 yen).

In addition, the notification encourages local governments to include TV replacements in hotels as eligible for subsidies if conditions permit.

The notification not only calls for direct discounts, but also encourages the use of real-name consumer vouchers and other methods to quickly distribute subsidies. It also requests that the evaluation of subsidies be carried out with a risk management approach to enhance efficiency. Furthermore, it requires the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance to report on the status of subsidy payments by February 10, 2025.

The funding for the subsidies will be provided by the National Development and Reform Commission through the issuance of ultra-long-term special government bonds. The central government will bear 90% of the burden, with differentiation in the percentage for different regions ranging from 85% to 95%.

In response to the sluggish growth in consumption, China announced the "Notification on the Action Plan for the Promotion of Large-scale Equipment Renewal and Consumer Goods Replacement" in March, and initiatives to stimulate consumption have since been launched across various regions. However, the national retail sales of goods only increased by 2.7% year-on-year in July and by 3.1% year-on-year from January to July, remaining significantly slower compared to the 7.9% year-on-year growth in 2019 before the outbreak of the COVID-19 pandemic.

The August 26 issue of the "Mainichi Economic Newspaper" features comments from industry insiders in the home appliance sector, stating that the consumption promotion measures implemented in April and May had limited effects due to the significant impact on local finances. It also introduces voices that appreciate the strengthened funding support from the government in the current notification.

(Note) In China, it is mandatory to affix labels indicating the energy and water consumption efficiency for the targeted products. According to the "Energy Efficiency Label Management Act" external website, a new window will open, which states that energy efficiency labels range from Grade 1 to Grade 5, with Grade 1 being the most efficient. Water utilization efficiency labels indicate the capacity such as water utilization efficiency grade and water utilization volume.