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China to offer subsidies on cars and appliances to lift weak demand

Beijing

CHINA on Tuesday unveiled a flurry of measures aimed at spurring sales of items ranging from cars and appliances to information services, as the world's second-largest economy grows at its slowest pace in nearly 30 years.

In a statement on its website, the National Development & Reform Commission (NDRC) said restrictions will be loosened on the second-hand auto market, and "appropriate" subsidies will be provided to boost rural sales of some vehicles and purchases of new-energy vehicles. The state planner did not give details of the subsidies, which it said that central and regional governments will set.

Last year, for the first time since the 1990s, auto sales in the world's biggest car market shrank, as China grappled with a slowing economy and fallout from trade frictions with the United States.

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The focus of new measures "is not simply to increase the consumption of large cars, but also to integrate the industrial transformation and upgrading of consumption", said NDRC official Liu Yunan at a news conference.

Wang Bin, deputy director of market operations at the Commerce Ministry, said in the long-term auto sales "are still the main factor driving consumption growth".

Miao Wei, Minister of Industry and Information Technology, told a separate news conference that in the past, "both sub-standard and high-quality vehicles were sold to consumers, but currently, resources will be allocated to high-quality companies".

Patrick Yuan, a Hong Kong-based analyst at brokerage Jefferies, said there were signs that auto sales have picked up this month, and "through local support policies, new-car sales can be promoted to low single-digit growth", he predicted.

Beyond cars, the NDRC also said it would accelerate the launch of commercial licences for 5G, the next generation wireless technology that promises to link everything from vehicles to household devices at far greater speeds.

China has pledged to speed up the commercial use of 5G technology this year and become a manufacturing powerhouse. China will support the sales of green and smart-home appliances, the NDRC said, adding regional governments should consider consumer subsidies for such products that would have an obvious impact on driving growth and reducing emission.

On Tuesday morning, shares of leading appliance makers outperformed the Chinese market, with Gree Electric Appliances up 1.2 per cent and the Midea Group 000333.SZ advancing 0.8 per cent.

Mounting pressure on China's economy pushed growth last year to its lowest since 1990, at 6.6 per cent, even as Beijing stepped up stimulus measures and pushed banks to lend more.

China will step up fiscal spending this year to support its economy, focusing on further cuts in taxes and fees for small firms, finance ministry officials said last week. REUTERS