les rose by 3.0 per cent. Retail sales of merchandise were up 0.9 per cent, and revenues from catering increased 1.2 per cent. For the first half as a whole, the headline sales number was up 1.3 per cent (+2.8 per cent excluding automobiles), with retail merchandise sales up 1.1 per cent and catering 2.8 per cent. Strongest merchandise categories in the first half were telecommunications equipment, tobacco and liquor, food, apparel and cosmetics. The weakest were motor vehicles, home improvement and home appliances. The government agency publishing these figures doesn’t provide a margin of error, but it is likely to be substantial given some of the skulduggery that goes into compiling the estimates. (Incentives are strong for local and provincial governments to inflate estimates to meet the “plan”.) We can say, though, that trend-wise things are not improving, and the government might need to reach deeper into its stimulus toolkit to move the needle in a positive direction. The trade-in scheme has shifted the timing of sales A material part of the stimulus programme for the past two years is the ongoing trade-in subsidy scheme. For 2026, the government renewed funding for the scheme to the tune of US$9 billion. Purchases of six categories of home appliances, including white goods and computers, attract a 15 per cent subsidy up to a maximum amount of US$215 per item. The purchased products must meet China’s most stringent energy efficiency standard. Consumers who trade in their old clunkers to purchase new cars can also receive a subsidy, which is proportional to the price of the new vehicle up to a maximum of approximately US$2,800. The government claims that in 2024–25 alone, the scheme resulted in the trade-in of 192 million appliances and more than 18 million vehicles. But inevitably, the scheme’s effectiveness is ebbing, and retail sales of home appliances have plummeted by 7.4 per cent and of motor vehicles by 12.6 per cent in the first half of 2026. This will not surprise economists, who are well aware that schemes like this are apt to pull the timing of sales forward, saturate the market and result in a nasty little trough at the end. It appears that the trough is nigh. There is some good news, though: telecommunications equipment is holding up well, with sales rising by 14.4 per cent year-on-year in the first six months, and the trade-in scheme takes part of the credit. Consumers purchasing phones, tablets or smartwatches priced under US$860 per item attract the same 15 per cent subsidy as appliances, up to a maximum of about US$70. The reason these items are doing better than appliances and cars is largely due to the rollout of new products by domestic phone brands such as Huawei. The price cap rules out high-end Apple models and favours the mid- to low-priced models of Chinese brands such as Huawei, Oppo, Vivo and Xiaomi. The government sees a gap that needs closing, but will it really happen? There is a huge gap between China and Western countries in the share of the economy accounted for by household consumption – something like 40 per cent for China compared with circa 70 per cent in the US and a bit less than that in Europe. The Chinese government would like to close that gap, or at least it says it would like to, and if it happened it would be good news for Chinese retailers and global retailers operating in China in the long term. Consumer service providers are also set to benefit. In order for that 40 per cent to increase significantly, it would mean importing more goods and reducing China’s massive trade surplus, since domestic suppliers would not be able to meet all of the additional demand. As happy as that would make some of China’s trading partners, the existing surplus is such a stupendous driver of China’s growth that reducing it would seem counterproductive. So healthy scepticism is warranted. To make it happen, on paper at least, on July 13 Beijing wheeled out a five-year plan from 2026–2030 with a consumption focus. The plan sets a target of US$9 trillion in annual retail sales in 2030, up from US$7.2 trillion in 2025. The target is actually modest but realistic, considering it translates to an annual growth rate of under 5 per cent. The government isn’t blind to the fact that, in order to meet consumption targets, it has to act to support incomes as well, which involves raising wages and shoring up the social security system so that people have the confidence not to squirrel all their money away for retirement or a major personal mishap. It isn’t clear how this will actually be done in practice. But wait… there’s a five-year plan for tourism as well That said, the emphasis isn’t all on domestic consumers. Like the five-year plan for consumption, there’s a five-year plan to put a rocket under inbound tourism as well. This plan is similar to the one that has been trotted out recently in Thailand, which wants to make specific locations within the country into a medical hub, a sports hub and a range of other specialised hubs. The Chinese government wants to broaden its visa-free entry allowance to more countries and expand the number of intercontinental flights. The aim is to bring in 190 million arrivals by 2030, which seems achievable considering it welcomed fewer than 155 million visitors in 2025. One country that China isn’t rolling out the welcome mat to is Japan, due to the ongoing standoff between the two countries over Taiwan and various maritime disputes. However, visitors from Europe, North America and the Middle East are more than welcome, and if the target numbers are reached, Chinese retailers will reap significant benefits. Further reading: Why do retailers across Indochina make such a hash of serving foreign customers?