Impact of Two New Policies on Boosting Domestic Demand Continues to Grow

Continuous Effects of the “Two New” Policy Strongly Boosting Domestic Demand

Beijing, May 21, 2025 – Since the implementation of the “Two New” policy, which focuses on large-scale equipment updates and the replacement of consumer goods, significant results have been achieved. According to the National Development and Reform Commission (NDRC), the effects of this policy have been increasingly evident this year, effectively stimulating domestic demand and promoting industrial transformation and upgrading.

Li Chao, Deputy Director and Spokesperson of the NDRC Policy Research Office, stated that the NDRC, in collaboration with various local departments, is making full use of the special long-term government bond funds to accelerate the implementation of the “Two New” policy. This initiative has become a crucial engine for expanding consumption, stabilizing investment, promoting transformation, and enhancing people’s livelihoods.

In terms of consumption stimulation, recent data indicates that the “Two New” policy has significantly boosted consumer vitality. In April, retail sales of home appliances, cultural and office supplies, furniture, and communication equipment at designated retail enterprises increased by 38.8%, 33.5%, 26.9%, and 19.9% year-on-year, respectively. The peak renovation season, combined with replacement subsidies, led to a 9.7% increase in the retail sales of building and decoration materials. These five categories alone contributed to a 1.4 percentage point increase in total social consumer goods retail sales. As of May 5, sales of five major product categories, including automobiles, home appliances, digital products, home decoration and kitchen appliances, and electric bicycles, reached approximately 830 billion yuan.

Regarding investment stimulation, in the first four months, investment in the purchase of equipment and tools grew by 18.2% year-on-year, contributing 64.5% to the overall investment growth. The manufacturing industries closely related to the “Two New” policy, such as computer and office equipment, consumer goods, and equipment manufacturing, saw investment growth rates of 28.9%, 13.4%, 8.2%, and 5.1%, respectively.

Li Chao also noted that as the demand for green, intelligent, and high-quality products continues to grow, equipment updates are driving sustained improvements in production efficiency. The production and profitability in related industries are also improving simultaneously. Statistical data shows that in April, the added value of high-tech manufacturing and digital product manufacturing industries increased by 10% year-on-year. Retail sales of new energy passenger vehicles reached 905,000 units, a 33.9% increase, with the retail penetration rate of new energy vehicles reaching 51.5%, up by 7 percentage points year-on-year.

The consumer goods replacement initiative has effectively met residents’ demands for high-quality living. By May 5, the number of applications for subsidies under the automobile replacement program exceeded 3 million nationwide, while consumers purchased over 55 million units of 12 categories of home appliances through the replacement program. Additionally, over 41 million digital products, including smartphones, were newly purchased, with more than 120 million people benefiting from purchasing their desired products at more favorable prices.

Looking ahead, how can the implementation of the “Two New” policy continue to yield results?

Li Chao outlined three key areas of focus for the NDRC: First, they will expedite the allocation of funds by working with the Ministry of Finance to complete the clearance of 2024 consumer goods replacement funds and distribute subsequent funding amounts swiftly. Second, they aim to enhance the efficiency of fund usage by establishing a direct and efficient mechanism for accessing special long-term government bond funds and launching a loan interest subsidy policy for equipment updates. Additionally, they will encourage relevant departments to simplify the subsidy application process, clarify review and payment timelines, and implement a pre-funding system to alleviate the financial pressure on businesses. Lastly, they will strengthen policy reserves by monitoring and evaluating progress, conducting in-depth research on incremental and reserve policies in the “Two New” field, and launching approved initiatives in due course.