The effectiveness of China's plan to increase consumption through trade-in incentives remains uncertain.

• Since its announcement in late July, China's plan to increase consumption through trade-ins has not yet shown significant results, according to businesses.
• Jens Eskelund, president of the EU Chamber of Commerce in China, stated earlier this week that there are no known companies that have turned this translation into tangible incentives on the ground in China since the implementation of the measures.
• In recent weeks, several major cities and provinces have disclosed information about their trade-in program for residents.

Several businesses told CNBC that China's plan to increase consumption through trade-ins has not yet shown significant results.

In July, China announced the allocation of 300 billion yuan ($41.5 billion) in ultra-long special government bonds to expand its existing trade-in and equipment upgrade policy, with the aim of increasing consumption.

The government is issuing ultra-long bonds to provide subsidies for the purchase of consumer goods and upgrades of large equipment.

Despite surprising analysts with the targeted move to increase consumption, the measures still necessitate China's cautious consumer to spend money initially and have a used product to exchange.

Jens Eskelund, president of the EU Chamber of Commerce in China, stated earlier this week that there are no known companies that have turned this translation into tangible incentives on the ground in China since the implementation of the measures.

He said, "Our encouragement is now to focus on execution for visible, measurable results."

The report published Wednesday stated that the central government's total budgeted amount for the policy is approximately 210 yuan ($29.50) per capita. However, only a portion of this amount will reach household consumers, making it unlikely that this scheme will significantly increase domestic consumption.

Retail sales may not be significantly boosted by the trade-in program, according to analysts' predictions.

In July, Tao Wang, the Chief China Economist at UBS Investment Bank, stated that the new trade-in program could potentially support approximately 0.3% of retail sales in 2023.

The retail sales for August in China will be reported on Saturday morning. Despite being the slowest since the Covid-19 pandemic, June's retail sales rose by 2%. July's sales growth, however, showed a modest improvement at 2.7%.

Despite a decline in overall passenger car sales in July, new energy vehicle sales experienced a significant increase of approximately 37%.

The trade-in policy increased existing subsidies for new energy and traditional fuel-powered vehicle purchases to 20,000 yuan and 15,000 yuan per car, respectively.

Waiting for elevator modernization

In March and April, China launched a broad policy to support equipment upgrades and consumer product trade-ins. Following the announcement of measures in late July, officials noted that 800,000 elevators in China had been in use for more than 15 years, with 170,000 of those having been operational for over 20 years.

In August, CNBC reported that two major foreign elevator companies had not received any specific new orders under the new program for equipment upgrades, as stated by them.

"Sally Loh, president of China operations for U.S. elevator company Otis, stated that the program is still in its early stages and the allocation of funds to elevators has not been clearly defined."

"The local government is definitely interested in ensuring that the central government's funding is effectively utilized for replacing residential buildings that require it, as announced, which will help resolve the financing issues that our customers faced."

During the second quarter, Otis' new equipment sales in China decreased by a significant margin, as stated in the earnings report, without providing a breakdown of revenue by region.

In the first six months of 2024, Kone's Greater China revenue decreased by more than 15% year over year to 1.28 billion euros ($1.41 billion), primarily due to the property market downturn. Despite this, it still accounted for over 20% of Kone's total revenue in the first half.

"Ilkka Hara, CFO of Kone, stated that they are definitely excited about the opportunity and have been looking forward to it for a long time. He added that this opportunity is more of a catalyst that will enable many to make a choice."

"I definitely see potential in the future, but the speed at which it manifests is uncertain."

Kone plans to expand its elevator service business while also offering new, energy-efficient elevator models.

Secondhand market outlook

The implementation of central government policies may require time, as only recently have major cities and provinces disclosed details on their trade-in program for residents.

Rex Chen, the CFO of For, stated that the ultra-long government bonds program to support trade-ins does not have a short-term impact on the company's operations.

He stated to CNBC that the policy encourages the long-term growth of the secondhand goods market and he hopes for increased government backing in establishing trade-in kiosks in local communities.

Last year, Apple named ATRenew its global trade-in partner, specializing in the pricing and resale of select secondhand products.

In certain regions, such as mobile phones and laptops in parts of Guangdong province, trade-in volume increased during the summer, according to Chen.

Since the release of the new policy, the number of trade-in orders from JD.com has increased by more than 50% annually, according to ATRenew.

— CNBC's Sonia Heng contributed to this report.