Replacement of old items expected to play key role in boosting buying power

China's intensified efforts to boost the consumption of green and smart home appliances and the replacement of old home appliances are expected to stimulate the purchasing power of consumers, shore up economic growth, and foster high-quality and sustainable development, industry experts said.

Their comments came as this year's Government Work Report stated China will continue to encourage local governments to promote spending on green and smart home appliances in rural areas to replace old home appliances as part of a broader push to expand domestic demand and promote the sustained recovery of consumption.

The replacement of old home appliances, with an emphasis on promoting green consumption, has come under the spotlight during this year's two sessions, the annual meetings of China's top legislature and political advisory body.

Dong Mingzhu, a deputy to the 13th National People's Congress and chairwoman of Chinese white goods giant Gree Electric Appliances, called for more efforts to set up a compulsory standard regarding the lifespan of home appliances as soon as possible, promote the establishment of a recycling and disposal system for discarded household appliances and regulate the trading of obsolete appliances.

In her proposal to this year's two sessions, Dong said the nation should prohibit outdated appliances that are beyond their service lives from entering the secondhand market and rural areas, strengthen the promotion and subsidies for the replacement of old home appliances, unveil relevant plans, and provide special subsidies for green home appliance products with high energy efficiency.

At present, growth in the domestic home appliances segment is slowing. Statistics from All View Cloud, a Beijing-based consultancy specializing in home appliances, showed China's home appliance sector in 2021 reached 760.3 billion yuan ($120.3 billion), up 3.6 percent year-on-year. However, this figure represented a drop of 7.4 percent compared with 2019.

China's home appliances industry, with the world's largest production and sales volume, is a key driver of the country's consumption growth. The promotion of green and smart home appliances is in line with the country's efforts to pursue a path of green, low-carbon and sustainable development, industry insiders said.

Zhou Yunjie, chairman and CEO of Chinese home appliance maker Haier Group, said more efforts are needed to build the whole industrial chain covering the recycling, dismantling and reuse of waste resources.

Zhou, also a deputy to the 13th National People's Congress, suggested regulating the recycling channel and formulating supportive tax policies as well as establishing standards that encourage the use of recycled materials.

The National Development and Reform Commission said 100 million to 120 million units of home appliances are discarded in China each year, and this number is expected to increase at an average annual rate of 20 percent.

Zhao Ping, deputy head of the Beijing-based Academy of China Council for the Promotion of International Trade, said the purchase of home appliances has become an important driving force in unleashing the potential of the domestic consumption market and stabilizing economic growth, along with the consumption upgrade.

Intelligent televisions, refrigerators and washing machines are gaining traction among Chinese consumers, Zhao said, adding the replacement of old home appliances with new ones will expand the sales of home appliance makers, and promote the development of related industries, such as the recycling, dismantling and reuse of home appliances.

"Boosting domestic demand is now the top priority for ensuring stable economic growth. The supportive measures aimed at guiding consumption upgrade will not only satisfy people's demand for higher-quality products, but also drive the green and smart transformation and upgrade of the home appliances industry," said Zhao Meimei, assistant president of AVC.

Noting the penetration rate of household appliances in China has hit a plateau, Zhao said more stimulus policies are needed to unleash consumer demand and promote consumption upgrades.

She added that encouraging spending on green and smart home appliances in rural areas and the replacement of old home appliances will play a positive role in tapping consumption potential and propelling the consumption of household appliances in rural areas.