The highly watched national consumer goods trade-in policy for 2026, referred to below as the national subsidy, has seen new developments. From December 27 to 28, Finance Minister Lan Fo'an said at the National Fiscal Work Conference that next year fiscal policy will vigorously boost consumption, deeply implement the special action for stimulating consumption, continue to arrange funds to support consumer goods trade-ins, and adjust and optimize the scope and standards of subsidies.

The continuity of the 2026 national subsidy policy received a clear answer at this National Fiscal Work Conference. At the same time, it was also emphasized that the scope and standards of the national subsidy will be optimized and adjusted.

The origin of the national subsidy policy can be traced back to the global financial crisis in 2008. At that time, in order to offset the decline in external demand, policies such as home appliances going to the countryside and automobile trade-ins were introduced. Through fiscal subsidies, they directly reduced consumption costs for rural and urban residents, rapidly driving growth in home appliance and automobile sales in the short term and becoming an important lever for stabilizing growth. Policies at that stage had a strong emergency character, with coverage concentrated on traditional bulk consumer goods and subsidies mainly provided in a universal manner, focusing on quickly activating market enthusiasm.

The national subsidy policy restarted in 2024 marked a shift in its function from short-term relief to long-term empowerment. Compared with early policies, the new version of the national subsidy has three major upgrades.

First, the coverage has expanded from a single category to multiple scenarios. According to relevant documents issued by the National Development and Reform Commission and the Ministry of Finance, in 2024 the national subsidy mainly covered scrappage and replacement of automobiles and eight categories of home appliances such as refrigerators. In 2025, the national subsidy expanded significantly, with policy coverage extending from basic bulk consumption to full-scenario quality consumption. Subsidy standards for some categories were also optimized at the same time, creating dual drivers of broader coverage and more effective standards.

Second, subsidy standards have shifted from a one-size-fits-all approach to differentiated optimization. For example, in automobile scrappage and replacement, subsidies for new energy vehicles increased from RMB 10,000 to RMB 20,000, while subsidies for fuel vehicles rose from RMB 7,000 to RMB 15,000, using price leverage to guide green consumption.

Third, the funding source has expanded from annual budgets to ultra-long-term special treasury bonds. The scale increased from RMB 150 billion in 2024 to RMB 300 billion in 2025, providing stable support for policy continuity.

It is worth noting that in 2025 the national subsidy included mobile phones, tablets, smart watches and wristbands, as well as home improvement and electric bicycles for the first time. Taking smartphones as an example, this year's national subsidy policy offers up to 15 percent off for products priced below RMB 6,000, with a total subsidy not exceeding RMB 500, which has significantly stimulated momentum in the sub-RMB 6,000 market.

The expansion of subsidy coverage and the optimization of standards are not being advanced in isolation, but work in coordination with stronger funding sources. In 2024, the Ministry of Finance issued RMB 150 billion in ultra-long-term special treasury bonds to support the national subsidy, and in 2025 this amount rose to RMB 300 billion. The doubling of funding scale provided hard support for broader coverage and higher standards, ensuring that subsidies for newly added categories such as digital products and home improvement could be fully implemented and avoiding the embarrassment of hot policies but cold execution. This systematic design of coverage, standards, and funding has upgraded the national subsidy from an early emergency stimulus tool into a normalized consumption promotion mechanism, laying a practical foundation for further optimization and adjustment in 2026.

Although the national subsidy policy has achieved remarkable results, many problems still need to be optimized during its expansion. For example, in May 2025 some places temporarily suspended the national subsidy. From the perspective of funding correspondence, this was mainly because subsidy funds were being consumed faster than the issuance of special treasury bonds, and was also related to stronger efforts to prevent policy arbitrage. This caused fiscal policy in the second half of the year to focus more on implementing existing funds rather than adding more beyond the RMB 300 billion quota. Some analyses pointed out that on the one hand, the trade-in policy needs to ensure continuity in scale to prevent the risk of weakening consumer momentum, and on the other hand, the policy mechanism needs to be further improved to reduce unfair market competition caused by factors such as differences in subsidy standards.

As the number of subsidized categories grows, some regions may show tendencies toward local protection, giving priority to local brands or designated sales channels and restricting high-quality out-of-town products from participating in competition. In addition, cumbersome review procedures, such as requiring proof of old item recycling and invoices for new purchases, may increase the cost of applying for subsidies for consumers, especially making the process less friendly for middle-aged and elderly groups or consumers in county-level markets. If these problems are not solved, they may weaken the universal nature of the policy and even distort market mechanisms.

To make the national subsidy truly become a powerful engine for expanding consumption, precise efforts are needed in three aspects: coverage, standard design, and supporting mechanisms, so as to build a policy system featuring precise support and long-term empowerment. At the same time, subsidy standards should be optimized, strengthening the combination of guidance and constraint. In terms of supervision, a unified national information platform for trade-ins should be established to realize full-process online management of old-item recycling, new-purchase verification, and subsidy issuance, thereby reducing room for manual manipulation. In addition, policy effects should be regularly evaluated, and categories with low funding efficiency or obvious market distortion should be adjusted in a timely manner to ensure that resources are used where they matter most.

From the emergency measure of 2009 to the systematic strategy of 2026, the national subsidy policy has become an important tool for expanding consumption. In the opening year of the 15th Five-Year Plan period, only by promoting deeper and more solid implementation of the national subsidy through more precise coverage, more scientific standards, and more complete mechanisms can policy dividends truly be transformed into consumer confidence and market vitality, achieve effective improvement in economic quality, and inject lasting momentum into economic growth.

Source: Economic Observer