Abrupt halt to shopping vouchers – meant to stimulate consumption and boost economy – comes as a surprise, with depleted funds and ‘programme upgrades’ cited
With e-commerce platforms gearing up for one of China’s biggest shopping festivals of the year, some local governments have suddenly paused subsidies offered for certain goods through a national trade-in programme, upending expectations that the offerings would continue all year.
As of Thursday, consumers in Guangzhou, the capital of the southern provincial powerhouse of Guangdong, found that they could no longer claim vouchers for home-remodelling products such as doors, ceramic tiles and sofas, which previously offered subsidies of up to 20,000 yuan (US$2,785) per person.
The city has also halted subsidies for home appliances and electronics.
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Jiangsu province halted online shopping vouchers on Sunday but has continued to issue limited daily vouchers for offline purchases, while Hubei province and other cities in Guangdong, including Shenzhen, Dongguan and Zhongshan, have stopped subsidies for smart home appliances, according to an announcement on e-commerce platform JD.com, one of the channels where consumers could apply for the subsidy.
This is the
second year
of China’s trade-in programme, which aims to boost consumption and ease overcapacity across sectors. Having been expanded from product replacements, the programme now uses hundreds of billions from the sale of
ultra-long-term special government bonds
to offer 15-20 per cent discounts on select goods.
Last year, most local government subsidies lasted until the end of the year, so the abrupt midyear halt this year – ahead of what is known as the 618 shopping festival, with e-commerce platforms looking to maintain sales momentum – caught some people off guard.
The commerce-fuelled festival celebrates the June 18, 1998, birthday of JD.com. Every year in the lead-up to the occasion, the nation’s e-commerce landscape is packed with promotions and discounts on some of the most sought-after products.
Per the announcement on JD.com, most regions cited “programme upgrades” as the reason for the subsidy pause, without providing further details.
Meanwhile, the southwestern megacity of Chongqing said in an announcement on the online payment platform UnionPay that the first round of funding for certain goods had been depleted.
On Tuesday, Chongqing halted subsidies for home appliances such as televisions and air conditioners, after it limited vouchers for products in those categories in May.
In response to subsequent consumer complaints, the Chongqing municipal commerce bureau said it was planning a second round of subsidies, with details to be announced this month.
Last month, a district-level government in Gansu province made a similar announcement, halting trade-in programme subsidies due to depleted funds.
China’s central government has earmarked 300 billion yuan from ultra-long-term special treasury bonds to support this year’s trade-in programme, doubling the 150 billion yuan planned at the start of last year.
Analysts have deemed the trade-in programme an effective consumption-stimulus policy by the Chinese government, but some have warned that the initiative is now seeing diminishing returns, as near-term demand is exhausted amid a lack of acceleration in household income growth.
The expansion of subsidies this year to more product categories has helped support subsidy-application numbers, to some extent, but demand might have weakened, said Ernan Cui, China consumer analyst at Gavekal Dragonomics, pointing to fund constraints.
“The most important reason for the slowdown is almost certainly demand,” Cui said. “Household consumption growth is largely determined by income growth, which has not improved due to the slack labour market.
“That means there’s only so much consumer demand for the programme to pull forward.”
Cui predicted that policymakers were likely to respond by further scaling up the programme in the second half of 2025 to support economic growth – especially as retail sales could start to decline in year-on-year terms in later months due to a higher base from last year.
When Emma Song, a Shenzhen-based public relations worker, heard that some regions had stopped subsidising electronics, she immediately checked the latest policy in Shenzhen. She said she let out a sigh of relief when she realised that an electronic reading gadget she had her sights on was still discounted, as it was not considered a smart device that Shenzhen had halted subsidies for.
“If Shenzhen’s subsidy [on that reading device] ends, too, I wouldn’t buy it now,” the 26-year-old said. “I’d wait until the next round.
“I’d feel like I got a bad deal if I missed out on the subsidy.”
Last year, Song purchased a new phone just before the subsidies were expanded to include such electronics, and she said that missing out on savings was a pity.
As of May 31, China’s trade-in programme had generated about 1.1 trillion yuan in sales this year, according to the Ministry of Commerce. National retail sales accordingly grew by 4.7 per cent, year on year, in the first four months.
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