(Yicai) July 26 -- China will allocate CNY300 billion (USD41.5 billion) in ultra-long special treasury bonds for large-scale equipment upgrades and trade-in of consumer goods to boost domestic demand.

The National Development and Reform Commission and the Ministry of Finance jointly released the new measures aimed at spurring China's economic recovery yesterday.

About CNY148 billion of the bonds will be used for equipment upgrades, and around CNY150 billion will be allocated to local governments for their independent trade-in programs of old consumer goods, said Zhao Chenxin, deputy director of the NDRC.

The measures expand the support scope and raise subsidy standards, Zhao noted. They extend support from ultra-long special treasury bonds to equipment upgrades in the energy and electricity fields and of old elevators, energy conservation, carbon reduction, and safety reformation in key industries, Zhao added.

Trade-in of consumer goods includes renewal of passenger cars by individual consumers, trading household appliances and electric bicycles, renovating old houses, kitchens, and bathrooms, and purchasing materials for renovating homes to be more elderly-friendly, Zhao noted.

The measures change the proportion of funds the central and local governments pay to ease the pressure on local fiscal expenditures, said Fu Jinling, head of economic construction of the finance ministry. The subsidy funds for the scrappage and renewal of autos and old operating trucks, the renewal of new energy buses and power batteries, and the trade-in of old home appliances will be paid by the central and local governments in a 9:1 ratio, Fu pointed out.

Local governments should make good use of the subsidy funds and must not use them to balance their budget and repay debts, Fu stressed. They should guard against the illegal repair of old home appliances aimed at being sold at top quality prices, prevent regional protectionism, and stick to equal treatment of domestic and foreign brands, according to Zhao.

China's gross domestic product expanded by 5 percent in the six months ended June 30 from a year ago based on economic statistics, continuing the recovery trend but with short-term fluctuations, according to Zhongtai Securities. Large-scale gear upgrades and trade-in of consumer goods will have a significant role in better releasing the potential of domestic demand.

No effort should be spared during the implementation of policies to improve the efficiency of fund utilization and choose highly technical projects that can boost the development of a single industry and even the entire supply chain so that large-scale equipment upgrades and consumer goods trade-ins can boost economic growth and improve people's living standards, said Bai Ming, a member of the academic committee of the Ministry of Commerces' Chinese Academy of International Trade and Economic Cooperation.

Editor: Martin Kadiev