Buy or wait? Chinese consumers bet on more subsidies to revive economy

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Retailers fret about weak sales while ‘greedy’ consumers hold out for bigger subsidies from Beijing next year

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Consumers shop for refrigerators at a trade-in promotion for home appliances in Handan on October 7, 2024. Photo: Getty Images

Daniel Renin Shanghai

Published: 10:00am, 25 Dec 2024

There is a reason China’s business community is fretting. Retail sales have been sluggish this year as households lock up more of their savings in bank deposits. Yet, despite its best policy intention, the government may be partly to blame.

Chinese consumers, hooked to Beijing’s 300-billion yuan (US$41.1 billion) subsidy programme in 2024, are in a bind. Some have rushed to grab the handout before the scheme ends on December 31. Others are holding back purchases in the hope of bigger handouts next year.

Under Beijing’s trade-in scheme implemented since March, a shopper who buys a new home appliance, such as a television or a refrigerator, is eligible for a 2,000 yuan rebate per item. China’s retail sales in December and January are likely to mirror that dilemma.

“The incentive is already highly favourable but many appear to be greedy,” said Ma Tao, a sales representative in Shanghai with Japanese brand Sharp, whose sales have failed to meet expectations. “They keep harping on the subsidy topic. They reckon the government will be even more generous to stimulate demand in 2025.”

People looking at home appliances in a retail store in Changchun, Jilin province of China in September 2024. Photo: Getty Images

They may have a case. China’s gross domestic product rose 4.8 per cent in the January-to- September period, trailing the official target of around 5 per cent. Retail sales rose at an annual pace of 3 per cent in November, the statistics bureau said, versus 4.8 per cent in October. It trailed the consensus forecast of 5.3 per cent.