The demand-side counterpart to China's other state-directed industrial-policy themes. Where china-semiconductor-self-reliance catalogues sector-specific industrial finance (Big Fund III) and china-minerals-counter-strike catalogues the MOFCOM export-control leverage instruments, this theme captures Beijing's broad fiscal / quasi-fiscal stimulus reorientation around equipment renewal and consumer-goods replacement demand.
What it includes
1. 2024-03-13 State Council "Two New" Action Plan (severity 5, Guo Fa [2024] No. 7): the umbrella State Council action plan on large-scale equipment renewal and consumer-goods trade-in. CNY 150bn of ultra-long-term special treasury bonds in 2024, expanded to CNY 300bn in 2025; >CNY 1.3 trillion of stimulated year-1 trade-in transactions across autos, appliances, home furnishings, e-bikes; 2027 quantitative targets covering equipment investment, scrap-vehicle recycling, scrap-steel utilisation, and standards-uplift across industry / agriculture / construction / transport / education / healthcare.
Why this regime matters
Three transmission channels make the Two New / domestic-demand cluster structurally important for global investors:
- Commodity demand pull. Equipment-renewal capex feeds copper,
aluminium, special-steel, and battery-mineral demand at a moment when property-construction commodity demand is contracting. The scrap-steel utilisation target alone (345 Mt/yr by 2027 vs ~260 Mt/yr in 2023) is a material change in iron-ore vs scrap flows.
- Capacity-utilisation backstop. The auto trade-in subsidy
structurally favours BEV/PHEV replacement, sustaining Chinese cell capacity utilisation (CATL, BYD, CALB) and the lithium-cobalt- nickel chain. Year-1 stimulated 6.8m vehicle trade-ins.
- Trade-policy feedback loop. The export overflow of state-
subsidised manufacturing capacity is the predicate that EU and US trade-policy actions (filed: 2024-10-29-eu-china-ev-cvd, 2024-05-14-us-section-301-tariff-hikes-china) cite for countervailing duties and Section 301 escalation. Two New belongs in the IPTM register as the demand-pull side of that political economy.
What to watch
- Provincial co-funding stack: central CNY 300bn 2025 envelope
is the visible layer; provincial finance bureaus add more. True fiscal-impulse only computable when provincial layer is sized.
- Substitution vs additive demand: how much of 2024's CNY 1.3tn
stimulated transactions was pulled forward — leading indicator is 2026H1 auto and appliance retail-sales prints.
- Fold-in to 15th Five-Year Plan (2026-2030): whether Two New
becomes a permanent fixture of demand-side policy or sunsets on its 2027 horizon.
- Future filings: State Council 9-Point Capital Markets
guidelines, real-estate destocking / mortgage-rate packages, and any further consumer-credit / appliance-channel expansions are candidate additions to this theme.