BEIJING - China's use of ultra-long treasury bonds to fund a consumer goods trade-in programme deviates from the usual playbook of boosting investment to support the economy and is fuelling expectations for more stimulus that targets household demand.
More stimulus measures could be announced at a politburo meeting this month or later in the year if growth fails to pick up, economists said. The total funds allocated since March are unknown, but appliance sales in June were 7.6% lower than last year, and car sales were down 6.2%.China's consumption programme is a rare move, but still a far cry in both scope and size from the handouts seen in the United States and elsewhere during the pandemic, and analysts have raised concerns about its design.
Lin, who works for a delivery platform and only gave his surname for privacy reasons, bought a 3,000 yuan air conditioner he really needed for two-thirds of the cost through the scheme. In their current form, the trade-ins can also be seen as back-door manufacturing subsidies, as they direct household resources towards industries that have built large inventories due to expanding capacity in a subdued demand environment.
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