China doubles subsidies for EVs in its 'cash for clunkers' program

China has taken significant steps to stimulate its slowing economy by cutting its one-year benchmark lending rate by 20 basis points to 2.3%, marking the largest reduction since the COVID-19 pandemic began. The People's Bank of China also lowered the rate on 7-day loans to 1.7%. In conjunction with these rate cuts, major state-run banks have reduced deposit rates, which may not effectively encourage consumer spending, a critical factor for economic recovery. The economy grew at an annual rate of 4.7% in the last quarter, down from 5.3% earlier in the year, amid ongoing challenges in the property sector.

Additionally, the Chinese government has doubled subsidies for electric vehicles (EVs) as part of its "cash for clunkers" program, aimed at replacing older vehicles. Eligible purchases of EVs will receive subsidies of 20,000 yuan (approximately $2,750), while subsidies for fuel-efficient cars will be 15,000 yuan (around $2,100). The program also includes incentives for new energy-efficient appliances and aims to generate demand across various sectors. The National Development and Reform Commission plans to invest tens of billions of yuan in these initiatives, which coincide with a broader strategy to address economic growth challenges and promote green technology. These measures come as global markets face downturns, particularly in China, where stock indices have seen significant losses.