China’s desperate bid to fix one of its biggest problems has backfired

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Four months ago, China’s leaders announced what seemed like a straightforward and proven plan to recharge the economy, but its citizens are not playing ball.

Four months ago, China’s leaders announced what seemed like a straightforward and proven plan to recharge the economy: subsidise consumers who want to replace old cars and household appliances.China’s leaders vowed to kick-start spending by offering subsidies for households to buy cars and appliances. But many consumers aren’t biting.Only 113,000 cars qualified for trade-in subsidies through June 25 — a blip in a country where monthly sales exceed 2 million cars.

Factories across China that make electric cars or household appliances are hustling to find export markets. The electric car factory in Nanchang, for example, ships about 3000 cars a year overseas, but does so in unprofitably small batches to 30 countries. European and Chinese officials agreed last month to hold talks to avoid tariffs, but the two sides remain far apart.

Subsidies for electric cars are scarcely more generous. Most cars must be at least 13 years old to qualify for replacement. Only about 10 million of the country’s 250 million registered cars are eligible. “Consumers are still reluctant to trade in their cars for now,” said Cui Dongshu, secretary-general of the China Passenger Car Association. “It will be a gradual process.”

 

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