China Brings in Subsidies for Smartphones

The Chinese Communist Party will give citizens a great deal for their old smartphones. 

On Friday, Beijing announced that a state-subsidized trade-in program that previously applied to big appliances and cars will now be widened to include smaller electronics including smartphones, per Bloomberg. It’s part of China’s efforts to give its flagging domestic consumer market a shot in the arm, especially since its export industry is weakened and heading for some major geopolitical dustups.

Phoning it In

The Chinese government spent a lot of last year trying to stimulate the country’s ailing economy, which buckled under a timid consumer market and a full-blown real-estate crisis. According to a McKinsey report, the government’s various stimulus packages did generate a smidge of momentum — retail sales experienced an uptick in October — but not enough to dispel the economic uncertainty.

Some industries are evading the consumer gloom. According to McKinsey, that includes electric vehicles, which are heavily subsidized by the state. Now, it looks like China’s government wants to bring some of that magic to the smartphone market, which is already showing signs of domesticity:

• Data from a state-backed research group called the China Academy of Information and Communications Technology released last week said that foreign phonemakers are rapidly hemorrhaging market share in China. According to the data, shipments of foreign phones dropped 47.4% year-on-year in November. 
• Apple has been on a mission to prop up its China sales with rarely-offered discounts. Meanwhile China-based smartphone-maker Huawei steadily gained market share last year.

Watch Out: The newly broadened trade-in subsidy doesn’t just apply to smartphones; tablets and smartwatches will be included as well. Apple might have to start busting out some discounts for Apple Watches soon.