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China’s central government listed “boosting consumption…and stimulating domestic demand” as its first “major task” for 2025, at the recently closed “two sessions”.
As part of this focus – and amid slowing economic growth – the State Council made specific mention of China’s “two new” (两新) policy.
The policy was first announced in 2023, but was heavily promoted last year. President Xi Jinping reportedly “stressed the importance” of a national recycling company as part of the policy in 2024, because it “facilitates green, low-carbon and circular development”.
Carbon Brief explains what the policy is, how it works and what its impact will be. An abridged version of the article appeared in China Briefing on 20 March.
What is ‘two new’?
The “two new” policy is short for “large-scale equipment upgrades and trade-in of consumer goods”. It is designed to boost domestic demand to prop up growth, at the same time as improving the efficiency of equipment so as to lower emissions.
According to the Communist party’s leading magazine on ideology Qiushi, the idea was first raised in 2023 at an economic conference held by the State Council for “improving technology, energy consumption, emissions and other standards”.
It became well-known after Xi reiterated the idea in early 2024. In March 2024, the policy then became an “action plan – a document illustrating specific methods for executing a political goal.
Prof Bai Quan, director of energy transition at the Academy of Macroeconomic Research – a research institution under the direct supervision of the State Council – told Carbon Brief in 2024 that there are four aspects of “two new”:
- Updates to equipment such as large boilers, turbines, heat pumps and lighting used for manufacturing;
- Trade-in of consumer goods, including fridges and air conditioners;
- Recycling of old or high-emission items;
- Improving standards for product efficiency and emissions, as well as for recycling, “to prevent people from re-purchasing outdated equipment with low energy efficiency”.
He added that the first three aspects directly “promote carbon reduction” and the last one “indirectly serves energy saving and carbon reduction goals”.
