Governments often try to encourage people to spend, but few programs touch ordinary Chinese households as directly as the trade-in subsidy. During the October 2026 National Day holiday alone, the Ministry of Commerce reported that the policy helped 6.39 million purchases and drove 33.48 billion yuan in sales in just the first six days. To understand modern China's economy and daily life, it helps to know what this ubiquitous program is.
The Basic Idea
The concept is simple: if you scrap or sell an old item and buy a qualifying new one, the state gives you a cash payment covering a fixed percentage of the new price, up to a cap. In 2026, uniform national standards were set for three broad groups — cars, six categories of home appliances, and four categories of digital and smart devices — under a joint policy issued by the National Development and Reform Commission and the Ministry of Finance, with detailed rules from the Ministry of Commerce and other departments.
The program pursues several goals at once. It supports consumer spending in a cautious economy, it removes old polluting vehicles and inefficient appliances from use, and it steers purchases toward electric, energy-saving, and smart products. That mix of economic stimulus and industrial or environmental policy is characteristic of how many Chinese consumer programs are designed.
Cars: The Biggest Subsidies
Cars receive by far the largest payments, and the rules distinguish two situations.
Scrapping and replacement: if an individual consumer scraps an old qualifying passenger car registered in their name and buys a new one, the subsidy is 12 percent of the new vehicle's price for a new energy vehicle (an electric or plug-in car), capped at 20,000 yuan, or 10 percent for a gasoline car with an engine of 2.0 liters or smaller, capped at 15,000 yuan. Certain age rules apply to the scrapped vehicle, depending on its fuel type.
Trade-in (resale) replacement: if, instead of scrapping, the consumer sells and transfers a car registered in their name and buys a new one, the subsidy is 8 percent for a new energy vehicle, capped at 15,000 yuan, or 6 percent for a small-engine gasoline car, capped at 13,000 yuan. New energy vehicle, often abbreviated NEV, is the standard Chinese term for a fully electric or plug-in hybrid vehicle eligible for the country's green-car policies.
Percentages are applied to the new car's full price including tax, and the payment is rounded up to the nearest yuan. During the holiday, 68,000 cars were replaced under the scheme, generating 10.92 billion yuan in new-car sales.
Home Appliances: 15 Percent for Efficient Models
For appliances, the rule rewards the most efficient products.
When an individual buys one of six categories — refrigerators, washing machines, televisions, air conditioners, computers, or water heaters — and chooses a product meeting the top (level 1) energy-efficiency or water-efficiency standard, the government covers 15 percent of the sales price. Each consumer can receive the subsidy for one item per category, with a cap of 1,500 yuan per item. During the holiday, 2.85 million appliances were traded in, driving 12.34 billion yuan in sales.
Phones and Smart Devices: 15 Percent, Smaller Caps
Digital products follow a similar pattern with lower limits.
Buying a phone, tablet, smart watch or wristband, or smart glasses — each with a sales price of no more than 6,000 yuan — qualifies for a 15 percent subsidy, limited to one item per category per person and 500 yuan per item. Subsidies for smart-home products, including products designed for older adults, are set by local governments according to local conditions. During the holiday, 3.05 million digital and smart items were newly purchased under the policy, producing 8.68 billion yuan in sales.
How You Actually Get the Money
The process has been moved largely onto a phone, which matters for how ordinary people experience it.
For cars, the single official entry point is the national automobile circulation information management system, accessed through a "car trade-in" mini-program — a lightweight app that runs inside WeChat, China's dominant all-purpose app. The consumer registers or logs in, chooses either the scrapping or the resale channel, and uploads the required documents, such as their identity card, the vehicle identification number, proof of scrapping or resale, the new-car invoice, and the vehicle registration certificate.
According to the published rules, the application is accepted within roughly three working days and reviewed within fifteen; once approved, the subsidy is paid directly into the applicant's bank account within about thirty working days. For appliances and phones, the discount is very commonly applied instantly at the checkout of participating stores or online platforms, with the retailer later settling with the government — meaning shoppers often just see a reduced price rather than waiting for reimbursement. The exact handling varies somewhat by locality and retailer.
Where the Money Comes From
The program is funded through central government fiscal resources channeled to local governments.
In 2026, the central government used long-term special treasury bonds to support the scheme; Chinese officials said 250 billion yuan in such bonds earmarked for consumer trade-ins had been fully allocated. The money is then distributed among provinces according to a formula that weighs factors such as each region's permanent population, gross domestic product (GDP), and the number of cars and appliances in use, along with how well the region has executed the policy and any problems found in audits. In short, Beijing supplies the funds and sets national standards; local governments run the applications and checks.
What People Actually Bought
The holiday data reveal where consumer demand is heading.
Beyond the basic trade-in categories, the Ministry of Commerce reported strong growth in smart, green, and health-related goods: sales of embodied-intelligence robots on major platforms rose 1.3 times compared with a year earlier, smart-glasses sales doubled, water-saving devices rose 18.1 percent, powered exoskeleton assist devices rose 12.8 percent, outdoor sports equipment rose 10.4 percent, and the most efficient dishwashers rose 8.4 percent. Over the same period, prices of daily necessities stayed broadly steady, with the cost of eggs, vegetables, and pork slightly down.
What to Keep in Mind
A few qualifications keep the explanation accurate. The figures quoted are official statistics from the holiday period and cover purchases made through monitored channels; they are sales generated "with the support of" the policy, not pure additional spending that would not otherwise have happened, since some buyers would have replaced items anyway. Rules can be adjusted year by year, and this article describes the 2026 national standards; local governments retain some discretion, especially for smart-home goods. Some eligibility details, such as the age of scrapped vehicles and requirements that old and new transactions occur in the same province, matter in practice and can trip up applicants. Finally, the program's broader economic effect — how much truly new demand it creates versus shifting purchases forward in time — is a matter economists continue to debate rather than a settled figure.
What to Take Away
China's trade-in subsidy is, at its core, a straightforward bargain: replace something old and inefficient with something newer and greener, and the state returns a fixed share of the price — up to 20,000 yuan for a car, 1,500 yuan for an efficient appliance, or 500 yuan for a phone — claimed through a phone app or taken instantly at the register, and funded nationally through special government bonds.
Its appeal is that it reaches everyday purchases directly while quietly advancing larger aims: supporting cautious consumers, clearing out pollution and energy waste, and building demand for the electric and smart industries China is betting on. Whether every yuan represents genuinely new spending is arguable. What is not arguable is that, in modern China, the phrase "trade the old for the new" is no longer just a store slogan — it is national policy, and millions of households have used it.