Why has the local government subsidy been "paused"?

Abstract Recently, some regions have faced a shortage of national subsidies, attracting market attention. How has the "trade-in" mechanism changed compared to 2024, and why is the use of national subsidies faster in some areas? What is the effect of the "trade-in" policy? This article analyzes these issues for reference. What is different about "trade-in" this year? Support intensity and subsidy scope have both increased, and the allocation mechanism has been adjusted. Compared to 2024, the 2025 consumer goods "trade-in" policy has significantly increased funding support and subsidy scope. The scale of ultra-long-term special national bonds used for consumer goods "trade-in" has increased to 300 billion yuan. The subsidy scope has been significantly expanded. The scrapping and updating of vehicles will include fuel passenger cars that meet the National IV emission standards in the eligible scrapping and updating subsidy range; in the home appliance sector, new items such as microwaves, water purifiers, dishwashers, and rice cookers have been added. New subsidies for purchasing digital products such as mobile phones have also been introduced. In terms of "trade-in" fund allocation, the central government's subsidy ratio for various regions remains unchanged, but the allocation has been adjusted. The 2025 "trade-in" fund allocation will moderately tilt towards regions that performed well in the 2024 consumer goods trade-in work. Additionally, during the annual execution, some provinces will make appropriate adjustments to national subsidy funds based on significant changes in funding needs and uneven progress across cities, increasing the national subsidy amount for regions with high demand for trade-in funds, fast expenditure progress, and good usage effects. As of the end of May, the central financial subsidies for "trade-in" have reached 162 billion yuan, while some regions have a faster subsidy verification progress. Chongqing disclosed that as of May 21, its central subsidy payment progress for "trade-in" reached 82.3%, and by June 3, its current round of home decoration kitchen and bathroom, and green smart home appliance subsidies had been fully utilized. With the accelerated release of "trade-in" subsidies, as of May 31, the national sales volume of consumer goods through trade-in reached 1.1 trillion yuan, with approximately 175 million subsidies issued. What is the effect of the "trade-in" policy? The consumption of goods benefiting from the "trade-in" policy showed differentiation in April and accelerated in May. Data from retail sales of consumer goods show that in April, the consumption of goods benefiting from the "trade-in" policy was differentiated, with a slowdown in growth for automobiles and communication equipment, while home appliance consumption continued to accelerate. In April, the total retail sales of consumer goods increased by 5.1% year-on-year, a decrease of 0.8 percentage points from the previous value; in terms of structure, the sales growth of communication equipment and automobiles fell significantly, down 8.7 and 4.8 percentage points year-on-year, respectively, but the sales growth of home appliances remained high, increasing by 3.7 percentage points year-on-year to 38.8%. In the first four months, the "trade-in" policy had better effects in the central and western regions, with stronger driving effects from fiscal subsidies for automobiles, mobile phones, and trade-in in rural areas. In the first four months, the cumulative growth rate of home appliances and communication equipment sales in some central and western regions was significantly higher than the national level; in April, the year-on-year growth of home appliance sales in Liaoning and Gansu reached 97% and 88%, respectively. In terms of fiscal driving effects, the multiplier effect of the "trade-in" subsidy for automobiles in Liaoning was nearly 10; The multiplier effect of home appliance consumption subsidies in Jiangsu's counties is 0.7 higher than the provincial average. In May, the "trade-in" program accelerated, possibly due to collective early promotions by e-commerce platforms, price reductions on digital products and automobiles. The number of "trade-in" subsidies significantly accelerated in May; subsidies for home appliances and electric bicycles reached year-on-year increases of 41.6% and 29.5%, respectively. The acceleration of the "trade-in" program may partly be attributed to the fact that multiple e-commerce platforms started their "618" promotions at least a week earlier than in 2024; at the same time, the price reductions on certain digital products and automobiles in May may have also boosted consumers' willingness to participate in the "trade-in" program. Why have local government subsidies "paused"? While many regions have quickly processed subsidies under the expanded scope, there are still 138 billion yuan in national subsidies awaiting distribution. Currently, various regions are further expanding and adjusting the scope based on the national "trade-in" policy according to local conditions. Based on the national subsidy policy, localities determine the adjustment of subsidy scope and intensity according to their actual situations. For example, Jiangsu's home appliance subsidies cover 32 types of appliances, focusing on supporting local advantageous industries such as water dispensers and blenders. The intensity of automobile subsidies also varies by region; for instance, the subsidy standard for new energy vehicle trade-ins in Beijing and Shanghai is 15,000 yuan per vehicle, which is relatively low nationwide. Under the further expansion of local subsidies, some regions have experienced urgent subsidy limits, paused online subsidies, and changed subsidy mechanisms. For example, in early June, Chongqing announced the suspension of home renovation kitchen and bathroom "renewal" and green smart home appliance subsidy funds due to the exhaustion of subsidy funds; Foshan City in Guangdong Province announced that the subsidy funds for home appliance trade-ins, mobile phones, tablets, and personal automobile trade-ins would be adjusted to be released in three phases; Jiangsu has paused the online collection of national subsidies. Currently, there are still about 138 billion yuan in "trade-in" funds for consumer goods awaiting distribution, and if these funds are exhausted later, there may be a possibility of additional funding. At the national level, only 162 billion yuan of "trade-in" funds for consumer goods have been distributed, with about 138 billion yuan still awaiting distribution. The National Development and Reform Commission stated in late May that it would promptly track and evaluate the progress of various work, conduct in-depth research on incremental and reserve policies in the "two new" fields, and launch them after approval according to procedures. In response to the rapid use of subsidy limits in some regions recently, the Ministry of Finance and the State Administration for Market Regulation also stated that they would further improve work mechanisms to prevent fraud in national subsidies. Report Body 1. Why have local government subsidies "paused"? 1.1 What will be different about "trade-in" in 2025? Compared to 2024, the "trade-in" policy for consumer goods in 2025 will see significant increases in funding support and subsidy scope. The scale of special long-term national bonds for consumer goods "trade-in" will increase to 300 billion yuan, exceeding the 150 billion yuan of 2024. The scope of subsidies will also be significantly expanded. In the field of automobile scrapping and updating, fuel passenger vehicles that meet the National IV emission standards will be included in the eligible scrapping and updating subsidy range; in the home appliance sector, microwaves, water purifiers, dishwashers, rice cookers, and others will be newly added. The number of times some home appliances can receive subsidies will also increase significantly, with air conditioning products eligible for subsidies up to 3 units; In addition, new subsidies for the purchase of mobile phones and other digital products have been added. In terms of fund allocation for the "trade-in for new" program, the central government will maintain the subsidy ratio for various regions, but the allocation amount will be adjusted. The National Development and Reform Commission and the Ministry of Finance stated that in 2025, the fund allocation for the "trade-in for new" program will comprehensively consider factors such as the population size of each region, regional GDP, the ownership of automobiles and home appliances, the implementation of the 2024 consumer goods trade-in policy, and the execution of funds, to reasonably determine the scale of support funds for each region. The fund allocation will moderately tilt towards regions that perform well in the 2024 consumer goods trade-in work. Additionally, during the annual execution, some provinces will make appropriate adjustments to the national subsidy funds based on significant changes in funding needs across cities and uneven progress. For regions with high demand for trade-in funds, fast expenditure progress, and good usage effects, the national subsidy amount will be increased. Under the above incentives, as of the end of May, the central financial subsidies for the "trade-in for new" program have reached 162 billion yuan, and some regions have a faster subsidy reimbursement progress. Chongqing disclosed that as of May 21, it had paid out 2.47 billion yuan in "trade-in for new" subsidy funds, with a reimbursement progress of 82.3%. By June 3, the current round of subsidies for home decoration kitchens and bathrooms, as well as green smart home appliances, had been fully utilized. With the accelerated release of subsidies, as of May 31, the national sales volume of consumer goods under the "trade-in for new" program reached 1.1 trillion yuan, with approximately 175 million subsidies issued. Among them, 77.618 million units of 12 major categories of home appliances were applied for; 5.762 million items for home decoration kitchens and bathrooms; 5.629 million items for mobile phones and other digital products; and 4.12 million applications for automobile trade-in subsidies. 1.2 How effective is the "trade-in for new" policy? Data from social retail shows that in April, the consumption of goods benefiting from the "trade-in for new" policy showed differentiation, with a slowdown in the growth of automobiles and communication equipment, while home appliance consumption continued to accelerate. In April, the total retail sales of consumer goods increased by 5.1% year-on-year, a decrease of 0.8 percentage points from the previous value, mainly constrained by the decline in the retail growth rate of above-limit goods (-2.0 percentage points to 6.6%) From a structural perspective, the growth rates of communication equipment and automobile sales have significantly declined, with year-on-year decreases of 8.7 and 4.8 percentage points to 19.9% and 0.7%, respectively. However, the growth rate of home appliance sales remains high, increasing by 3.7 percentage points year-on-year to 38.8%. From the perspective of the "trade-in for new" situation in the first four months, the policy effects in the central and western regions may be better, with stronger driving effects from fiscal subsidies for automobiles, mobile phones, and other digital products as well as county-level "trade-in for new." At the regional level, in the first four months, the cumulative growth rates of home appliances and communication equipment sales in central and western regions such as Liaoning, Gansu, Yunnan, and Henan were significantly higher than the national level; among them, the year-on-year growth of home appliance sales in Liaoning and Gansu reached 97% and 88% in April, while the year-on-year growth of communication equipment sales in Henan and Yunnan reached 79% and 59%. In terms of fiscal driving effects, the multiplier effect of the "trade-in for new" subsidy for automobiles in Liaoning is nearly 10; the driving effect of fiscal subsidies for county-level home appliance "trade-in for new" is even better, with the multiplier effect of home appliance consumption subsidies in Jiangsu's counties higher than the provincial average by 0.7. In May, the "trade-in for new" accelerated, possibly partly due to the collective advance of promotional events on e-commerce platforms, with concentrated price reductions on digital products and automobiles. According to the number of covered products disclosed by the Ministry of Commerce at different times, the number of subsidies in five major subsidy areas significantly increased in May; the home appliance and electric bicycle sectors were the most notable, with year-on-year growth rates of 41.6% and 29.5%, respectively. The retail sales of passenger cars in May also increased by 13.0% year-on-year, showing significant improvement compared to April. The acceleration of "trade-in for new" in May may partly be due to the earlier start of the "618" promotional activities by multiple e-commerce platforms. In 2025, the start dates of the "618" events for Tmall, JD.com, PDD, Douyin, and others were at least one week earlier than in 2024 Some digital products and cars have seen concentrated price reductions in May, which may also enhance consumers' willingness to "trade in for new." 1.3 Why are local government subsidies currently "paused"? Currently, various regions are further expanding and adjusting based on the national "trade-in for new" policy according to local conditions or local advantageous industries. Based on the national subsidy policy, local areas determine the adjustment of subsidy scope and intensity according to actual conditions. For example, Jiangsu's home appliance subsidy covers 32 categories of appliances, including those with energy efficiency standards, such as air purifiers and steam ovens, as well as those without energy efficiency standards, such as electric hot pots and Bluetooth headsets; it also focuses on supporting local advantageous industries, such as water dispensers, electric ceramic stoves, wall breakers, and dehumidifiers. In terms of car subsidies, the intensity of subsidies varies by region. For instance, the new energy vehicle trade-in subsidy in Beijing and Shanghai is set at 15,000 yuan per vehicle, which is relatively low nationwide. Under the further expansion of local subsidy scopes, some regions have experienced phenomena such as urgent subsidy funds, suspension of online subsidies, and changes in subsidy mechanisms. For example, Chongqing announced that due to the exhaustion of subsidy funds, it would suspend the issuance of subsidy funds for 27 categories of home renovation kitchen and bathroom "renewal" products and green smart home appliance subsidies; Yangzhou in Jiangsu announced that it would no longer accept applications related to "home renovation and furniture trade-in subsidies" as the subsidy amount for this batch of applications had reached the limit; Foshan in Guangdong announced that it would adjust the subsidies for home appliance trade-ins, new purchases of mobile phones and tablets, smart home renewals, and personal vehicle trade-ins to be distributed in three phases, with the total subsidy amount controlled within each phase; Jiangsu announced the suspension of online receipt of national subsidies. At the national level, there are still about 138 billion yuan of funds for the "trade-in for new" program for consumer goods waiting to be allocated. If the funds are used up later, there is a possibility of additional funding being supplemented. At the national level, there are still about 138 billion yuan of funds for the "trade-in for new" program for consumer goods waiting to be allocated. Currently, only 162 billion yuan of funds for the "trade-in for new" program have been allocated, leaving about 138 billion yuan still to be allocated. In response to the "trade-in for new" policy, the National Development and Reform Commission clearly stated in late May that it will track and evaluate the progress of various work in a timely manner, conduct in-depth research on incremental and reserve policies in the "two new" fields, and launch them after approval according to procedures. Additionally, in response to the rapid use of subsidy amounts in some regions recently, the Ministry of Finance and the State Administration for Market Regulation also stated that they will further improve the working mechanism to prevent fraud in national subsidies. Through research, this article finds: (1) Compared to 2024, the support intensity and subsidy scope of the "trade-in for new" policy for consumer goods in 2025 will be enhanced, and the allocation mechanism will be adjusted. The allocation of funds for the "trade-in for new" program in 2025 will moderately tilt towards regions that performed well in the 2024 consumer goods trade-in work. Some provinces will adjust and increase the national subsidy amount for regions with high demand for trade-in funds, fast expenditure progress, and good usage effects. Against this backdrop, as of the end of May, although 162 billion yuan of central government subsidies for the "trade-in for new" program have been allocated, some regions have seen a rapid progress in subsidy verification. (2) In terms of policy effects, the consumption of goods benefiting from the "trade-in for new" policy showed some differentiation in April, with a significant acceleration in May. Data from retail sales shows that in April, the consumption of goods benefiting from the "trade-in for new" policy was differentiated, with a slowdown in growth for automobiles and communication equipment, while home appliance consumption continued to accelerate. In the first four months, the "trade-in for new" policy had better effects in the central and western regions, with a stronger pull effect from subsidies for automobiles, digital products, and county-level "trade-in for new" programs. In May, the number of "trade-in for new" subsidies significantly accelerated, partly due to the earlier promotion period of e-commerce platforms for the "618" sales event and price reductions for some digital products and automobiles. (3) Currently, there are still 138 billion yuan of national subsidies waiting to be allocated, and the possibility of additional funding cannot be ruled out. Various regions are further expanding based on the national "trade-in for new" policy, which has led to rapid use of subsidy funds in some areas, resulting in phenomena such as urgent subsidy amounts and the suspension of online subsidies The national "trade-in" funds still have about 138 billion yuan to be allocated, and there is a possibility of additional funding being supplemented after the current funds are used up. In response to the rapid use of subsidy amounts in some regions recently, the Ministry of Finance and the State Administration for Market Regulation have also stated that they will further improve the working mechanism to prevent fraud in national subsidies. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk