China includes smartphones in consumer electronics subsidies

China is including smartphones in its consumer electronics purchase subsidy plan for the first time, a measure that took effect on Monday.

The initiative aims to stimulate consumption and boost the economy, particularly ahead of the upcoming Spring Festival.

Smartphones costing under 6,000 yuan (US$819) can benefit from the new subsidy, which is expected to trigger a surge in consumption and phone replacements. The subsidies cover most brands, including basic-line and previous-generation iPhones.

The new subsidies will cover smartphones, tablets and smart watches and wristbands. These digital products costing under 6,000 yuan per item will receive a one-time subsidy of 15 percent of the product's sales price after the retailer's discount. Each consumer can receive a maximum subsidy of 500 yuan per item, with a limit of one subsidized item per category for each customer, according to the Shanghai Commerce Bureau. It released details of the subsidy rules on its WeChat account.

It's the first time that smartphones have been included in a batch of subsidy plans released in China since 2024 to stimulate consumption and boost the economy.

Most consumer digital devices refer to personal consumption, rather than home appliances bought for the family. Smartphone replacement will be more effective in stimulating consumption, according to research firm IDC analyst Guo Tianxiang.

People buy phones with subsidy

Customers are flocking to outlets in Shanghai and other cities after the launch of the subsidies. Local outlets like Suning are seeing many people making inquiries and queuing up to purchase.

"The Spring Festival is coming while it's the time to prepare for new items, clothes and now best time for smartphones with the subsidy," said a customer who have his name as Martin. He purchased a Vivo smartphone, enjoying a 1,200 yuan discount that included in-store sales and the national subsidy.

Other people were choosing iPhones and Huawei's flagship models. They enjoyed multi-subsidies with the national policy, special discounts offered by platforms like Suning, JD and China Mobile and trade-in policies, with total discounts of 1,500 yuan or more.

Smartphone sales in regions with the new subsidies jumped over 200 percent. The most popular models were smartphones priced between 3,000 to 4,000 yuan, according to online retail giant JD.com.

China Mobile also offers additional subsidies for subscribers. In the mobile terminal business, the carrier's Shanghai branch will offer 450 million yuan for smartphone subsidies. The subsidies, along with nation-level subsidies and trade-in subsidies, will boost smartphone sales, especially for domestic brands.

Shanghai Mobile's subsidized smartphone brands include Huawei, Xiaomi, Vivo and Oppo.

Catalyst for smartphone replacement

The national subsidy will further boost a rebound in the smartphone market.

China's smartphone market is set to grow for the first time in five years in 2025, fueled by increased replacement demand for 5G-A network and advanced AI functions, and now government stimulus initiatives, IDC said.

Comparatively, phones with the new features often cost more than 2,500 to 3,000 yuan, which is most suitable for the subsidy. It helps people to make a decision to own a fancier phone, according to industry insiders.

For example, 5G advanced or 5G-A offers up to 10 times mobile Internet access and super low latency, supporting artificial intelligence and Metaverse applications. In Shanghai, it now covers the whole region within the outer ring while more 5G-A phones will be subsided in 2025, said Shanghai Mobile.

Firms including Honor and Reamle welcomed to the new subsidy, listing detailed guides and prices after subsidies.

Previously, more than 36 million users enjoyed home appliance subsidies nationwide, boosting sales of 60 million digital devices in eight categories in 2024, with combined of revenue of 260 billion yuan.