China will increase subsidies for consumers who sell their cars and home appliances in order to purchase new ones, in an effort to spur domestic consumption and curb pollution, according to an cabinet meeting held Tuesday.

The government will raise subsidies for auto replacements from 1 billion yuan (US$145.9 million) to 5 billion yuan this year, and allocate 2 billion yuan to encourage home appliance upgrades, an executive meeting of the State Council presided over by Premier Wen Jiabao said.

The move will further help stimulate domestic spending after the rebate program for auto and home appliance buyers in the rural areas greatly boosted rural consumption, said a statement from the meeting.

Consumers who trade-in their used mid- and small-sized truck and some types of mid-sized passenger cars for new ones will receive a subsidy.

Subsidies will also be given to consumers who sell automobiles that no longer meet the government's emission standard, but are still within life expectancy.

The subsidy will be no more than the purchase tax of the automobile.

A pilot program of home appliance replacement will start in Beijing, Shanghai, Tianjin, Fuzhou, Changsha and provinces of Jiangsu, Zhejiang, Shandong, Guangdong, said the statement. No specific date was given.

Buyers will receive a subsidy worth 10 percent of the prices on five kinds of new appliances, namely, TV sets, refrigerators, washing machines, air-conditioners and computers.

Retail sales kept solid growth in China as the world's third largest economy turned to domestic consumption for growth after exports tumbled.

Retail sales rose 14.8 percent in April year on year to 934.32 billion yuan, the National Bureau of Statistics (NBS) announced last Wednesday.

The growth rate was 0.1 percentage point higher than in March.

From January to April, retail sales totaled 3.87 trillion yuan, up 15 percent over the same period last year.

More than 1.15 million vehicles were sold last month in China, up 25 percent year on year, according to China Association of Automobile Manufacturers on May 8.

Sales were boosted by government stimulus policies, Zhang Yunpeng, an analyst with Beijing-based Huarong securities told Xinhua last Wednesday. China in January halved the purchase tax on passenger cars to 5 percent for models with engine displacements of less than 1.6 liters.

As part of the government effort to boost consumption, China Banking Regulatory Commission (CBRC) said on May 12 that the consumers will get loans without collateral for buying durable goods, including appliances and electronic products, and other private consumption such as travel and education.

(Xinhua News Agency May 19, 2009)