As an important part of promoting a new round of large-scale equipment updates and the "1+N" policy system of consumer goods replacement, the "Measures" further strengthens the leverage of fiscal subsidies, and highlights the standards of technology, energy consumption, emissions, and safety as guidance, increases green and low-carbon advanced production capacity, improves existing production efficiency, thereby cultivating and growing new and high-quality green and low-carbon production forces, and guiding the industry to transform to green and low-carbon.

Guosen Securities' main points are as follows:

On July 25, 2024, the National Development and Reform Commission and the Ministry of Finance jointly issued the "Measures for Further Supporting Large-Scale Equipment Updates and Consumer Goods Replacement" (hereinafter abbreviated as the "Measures"). Through policy measures of coordinating the arrangement of about 300 billion yuan of ultra-long-term special national debt funds and 20 billion yuan of fiscal interest subsidies, cancelling the requirement for declaring the "total investment of more than 0.1 billion yuan" for ultra-long-term special national debt funds, expanding the scope of support, improving relevant equipment scrapping and replacement subsidy standards, and other aspects of increasing scale, lowering thresholds, expanding coverage, and simplifying procedures, it strives to promote large-scale equipment updates and consumer goods replacement.

As an important part of promoting a new round of large-scale equipment updates and the "1+N" policy system of consumer goods replacement, the "Measures" further strengthens the leverage of fiscal subsidies, and highlights the standards of technology, energy consumption, emissions, and safety as guidance, increases green and low-carbon advanced production capacity, improves existing production efficiency, thereby cultivating and growing new and high-quality green and low-carbon production forces, and guiding the industry to transform to green and low-carbon. Specifically:

In the field of increasing support for equipment updates, one is to include equipment updates in the fields of energy and electricity, old elevators, etc. into the scope of ultra-long-term special national debt support. In terms of electricity, it is expected that the "three reforms linkage" of energy-saving, flexibility, and heating of coal-fired units, and the replacement of old photovoltaic units and high-power wind turbine units will be the focus of policy force, reducing carbon emissions while reasonably utilizing the production capacity of the new energy industry. In terms of old elevators, China has more than 800,000 elevators that have been in operation for more than 15 years, and the number is still growing, so the elevator demand market potential will continue to be stimulated. The second is to focus on promoting operating transportation vehicles, increasing subsidy efforts, including operating ships, operating trucks and agricultural machinery. The carbon emissions of operating transportation tools account for more than 50% of the total emissions in the transportation industry in China, and the automobile and ship manufacturing industries are important engines and advantage industries for China's economic development. It is expected that China's commercial vehicle production enterprises and inland shipbuilding enterprises will usher in development opportunities, and generate a large demand for funds for the green transformation of production processes and products. The third is to guide financial resources to gather in the green and low-carbon industries. Central financial interest subsidies will be raised from 1 percentage point to 1.5 percentage points, which will further guide financial resources to be allocated reasonably to the green industry.

In terms of increasing support for the replacement of consumer goods with old ones, one is to increase subsidies for green consumption and promote the formation of a green production and lifestyle, focusing on promoting the replacement of cars and home appliances. In terms of automobiles, the subsidy for scrapping and replacing old cars will be increased, with a focus on encouraging the replacement of fuel vehicles with new energy vehicles or small-displacement cars (2.0-liter displacement or below). In terms of home appliances, it supports the replacement of products with energy efficiency and water efficiency levels of grade 2 or above. It is expected that the future new energy vehicle market space will be further expanded, and home appliance manufacturers will also increase their research and development investment and energy-saving and carbon-reduction transformation investment in high-energy efficiency/water efficiency products. The second is to vigorously develop a circular economy, focusing on supporting the establishment of a waste electronic product recycling and utilization system, and showcasing the value of an "urban mine". It is expected that the circular economy industry, especially the automobile recycling and electronic product recycling industrial chain enterprises, will usher in development opportunities.