Smartphones and other electronics will become cheaper in China – the country’s authorities will stimulate demand with subsidies

After the pandemic, the demand for consumer appliances in China was unable to recover to the desired level, so local authorities began subsidizing the purchase of household appliances and cars by the Chinese population last year. The program will expand to smartphones, tablets and smartwatches this year, officials said this week.

Image source: Huawei Technologies

With such measures, the Chinese authorities are trying to stimulate the consumption of goods on the domestic market, since Chinese manufacturers have to face various kinds of obstacles on the foreign market, such as protective duties on Chinese goods, which will only increase with Donald Trump coming to power in the United States. The Chinese government is preparing for these external impacts, preferring to stimulate demand in the country’s domestic market. This topic will become a priority for Chinese officials in 2025, as Bloomberg explains.

The lack of technological progress in terms of functionality has also led to stagnation in the smartphone segment, and although the upward trend in average selling price has continued, buyers have been sticking with one model for longer, which has reduced market turnover. The Chinese government intends to allocate funds raised through the placement of government bonds with an extra-long maturity to this program. In total, it is planned to raise at least $41 billion.

At the same time, Chinese manufacturers will be encouraged to update their equipment; this program will also cover the agricultural sector. It is noteworthy that some Chinese regions already launched their own trade-in programs for personal devices such as smartphones at the end of last year, but this year the program is reaching the national level. The Chinese authorities have experience in providing such subsidies. At the end of 2007, they were introduced to combat the global financial crisis and covered residents of rural areas, allowing them to buy household appliances, computers and cars on more favorable terms. This program only ceased operation in 2013.