China’s subsidies push tech and consumer goods markets

2024 marks a turning point for the technology and consumer goods markets: the industry returned to growth in 2021 for the first time. A major driver of this development was far-reaching economic and trade policy changes in China.  

Government subsidies fuel demand  

Since last August, the Chinese government has been promoting the purchase of energy-efficient electronics and home appliances with generous subsidies. Products such as TVs, laptops and large home appliances – including refrigerators, washing machines and air conditioners – are among those that have benefited. Buyers of devices with the highest energy efficiency rating receive a subsidy of 20%, but this is capped at 2,000 yuan. This means that the maximum benefit is available for purchases of around 10,000 yuan (about 1,300 USD).    This measure has made premium products more attractive – which had an immediate impact on market prices. In the last quarter of 2024, they rose significantly.   

Boost in the last quarter of 2024  

The subsidies quickly had an effect: between September and December 2024, sales of large home appliances and air conditioners grew by an impressive 33%, while prices rose by 11%. Other product categories also benefited: 

IT and office products: +14% sales  growth

Small home appliances: +8% (driven by regional funding programs) 

And consumer buying behavior also changed. In particular, brick-and-mortar retailers offering more premium products saw significant increases in sales.   

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2025: Even more subsidies for new categories 

In 2025, the Chinese government expands the program to include additional product categories – including dishwashers, microwaves, tablets and, especially, smartphones – due to the success of the previous initiatives. This expansion is likely to further drive short-term growth and significantly influence the entire technology and consumer goods market in China and worldwide. 

China’s strategic goal: GDP growth  

Why these subsidies? The government had a clear economic goal: to achieve the targeted GDP growth of 5% for 2024. Targeted economic stimulus measures were introduced with success, as domestic demand weakened in the first half of the year. Given the positive effects, the program could be extended until Q3 2025, similar to an earlier initiative from 2012-2013.   

What about 2025?

Growth will be significantly weaker in the fourth quarter of 2025, as it will have to compete with the exceptionally high comparative figures from 2024. Nevertheless, the industry remains optimistic. “The big question is where the money invested by the government will go in 2025 and 2026.”, says Norbert Herzog, Head of Global Strategic Insights at NIQ/GFK and expert for Major Domestic appliances. “With China’s demand situation still looming, investments of Chinese brands are likely to flow into other regions to stimulate growth in Southeast Asia, Latin America, and Europe, which could lead to continued price pressures in these markets.”

China’s policies are reshaping the global market  

The bottom line is that China’s trade and economic policies in the fourth quarter of 2024 have reshaped the global market landscape for technology and consumer goods – and set the course for further developments in the coming years.

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Based on a partnership between NIQ/GfK, gfu and IFA Management, we regularly inform you about market developments and trends from the home & consumer tech sectors. You will receive interesting insights, current market figures, consumer trends and much more professionally prepared from the sources of the three competent partners.