As China's economy enters a new phase of "breaking the mold and reshaping," what is the new logic behind its internal and external "dual circulation"? Currently, China's economy is at the intersection of the initial planning for its 15th Five-Year Plan and the profound reshaping of the global landscape. Domestically, ultra-long-term special treasury bonds and the "trade-in" policy are effectively stimulating domestic demand, though shifts in consumption momentum and structural differentiation warrant attention. Internationally, the irreversible trend of Chinese companies transitioning from "selling globally" to "establishing globally" continues, yet challenges such as insufficient brand premium, localization capacity building, and adaptation to geopolitical rules remain.
In this new phase, what new logic underpins China's internal and external "dual circulation"? Last week, several young professors explored this in depth at a scholar salon hosted by Peking University's Guanghua School of Management.
The Differentiation and Evolution of "Trade-in": Efficiency, Fairness, and Future Transformation
Since 2023, China's household consumption rate stood at 37.2%, below the global average of 53.8%, while the savings rate reached 43.4%. Against this backdrop, unlocking household consumption potential and improving consumption structure have become key focuses of policy design. Concurrently, the slowdown in the growth of durable goods consumption, such as home appliances, automobiles, and furniture, with the home appliance industry growing at 3.5% in 2023, has made the renewal of durable goods a significant entry point for consumption-stimulating policies.
Consequently, since 2024, the Chinese government's large-scale "trade-in" policy for consumer goods, funded by ultra-long-term special treasury bonds, has emerged as one of the most representative fiscal tools in recent years.
How has China's "trade-in" policy evolved over the past three years?
Luo Mi, an assistant professor in the Department of Applied Economics at Peking University's Guanghua School of Management, noted that in 2024, the "trade-in" policy for consumer goods involved an investment of 150 billion yuan, covering eight categories of home appliances with subsidies of 15% for second-tier energy efficiency and 20% for first-tier energy efficiency, capped at 2,000 yuan. In 2025, the funding doubled to 300 billion yuan, expanding home appliance categories to 12 and including 3C products like mobile phones for the first time, with a subsidy rate of 15% and a cap of 500 yuan. In 2026, the funding was adjusted to 250 billion yuan, with an additional 100 billion yuan in fiscal-financial coordination funds. The home appliance subsidy scope was reduced to six categories, covering only first-tier energy efficiency, while smart glasses were added to 3C products. As of early May 2026, the policy had benefited over 86 million people, driving nearly 630 billion yuan in sales.
"While the policy itself shows no bias, different platforms have responded differently, with self-operated models and platforms better aligned with local retail statistics rules gaining an advantage," Luo Mi stated.
Offline channels have also seen differentiation. Leading retailers like Suning.com and Red Star Macalline have reaped more benefits due to their financial strength, while small and medium-sized dealers have been marginalized due to high upfront capital pressure, delayed reimbursements, and cumbersome offline procedures. A "Matthew effect" has also emerged among brands, as high-end brands' post-subsidy prices approach those of mid-range brands, leading consumers to "trade up."
From the consumer perspective, in 2025, 360 million people applied for national subsidies in China, driving 2.6 trillion yuan in sales. Mobile phones accounted for 70%, while home appliances made up 54%. In terms of price distribution, mid-to-high-priced goods between 2,001 and 6,000 yuan collectively accounted for over 80% of sales. This indicates that national subsidies are stimulating not just low-price consumption but also renewal demand for mid-to-high-priced goods.
However, there is room for optimization in the policy's coverage balance. Luo Mi pointed out that rural and low-income groups may face challenges such as unverifiable old appliances, insufficient offline outlets, and the digital divide, resulting in relatively lower participation. The distribution of policy benefits across demographics, regions, and channels needs further improvement.
As the policy continues, demand for durable goods is being released earlier. Estimates from the Bank of China Research Institute show that the fiscal multiplier for home appliance categories in 2025 has dropped from a high level to 1.55, while the multiplier for communication equipment remains about twice that of home appliances. Luo Mi believes that expanding service consumption may become the next direction. In the second half of 2025, the central government proposed for the first time "cultivating service consumption as a new economic growth point." Compared to durable goods consumption, service consumption has stronger repurchase potential, weaker overdraft effects, and a higher share of labor compensation—approximately 52% in services versus 36% in manufacturing—making it more conducive to household income growth and consumption structure optimization.
In Luo Mi's view, the current "trade-in" policy still needs to address several relationships: the connection between short-term stimulus and long-term endogenous growth momentum, the smooth design of policy exit mechanisms, further optimization of coverage and fairness, coordinated development of channel structures, and continuous improvement of user experience.
"The future policy focus is shifting from 'stimulating consumption' to 'reshaping the consumption structure,' moving from durable goods to service consumption and from total expansion to structural optimization. How to balance efficiency and fairness, short-term stimulus and long-term transformation will determine the direction of China's fiscal consumption policy for the next decade," Luo Mi said.
From "Selling Globally" to "Establishing Globally": Entering the Deep Waters of Global Expansion
If "trade-in" reflects China's efforts to unlock domestic consumption potential, then brand globalization corresponds to Chinese companies reshaping their competitive approach internationally.
"If you don't go global, you're out of the game." Wang Rui, an associate professor in the Department of Marketing at Peking University's Guanghua School of Management, noted that this is no longer just a slogan but an increasingly strong consensus among Chinese manufacturing entrepreneurs in 2025. Based on 30 years of tracking data from the Chinese Entrepreneur Survey System, she believes that Chinese companies' internationalization process is undergoing a strategic leap from "selling globally" to "establishing globally." This is not only an upgrade in approach but also a reconstruction of cognition and capabilities.
The globalization of Chinese companies has not happened overnight. Since 1978, it has roughly gone through five stages: a closed germination period dominated by "three supplies and one compensation," a preliminary exploration period after the "going out" strategy was proposed, a dividend explosion period after WTO accession, a strategic expansion period thereafter, and a resilient integration period after 2019.
"For a long time, going global was almost synonymous with 'selling goods,'" Wang Rui stated. Data from 2008 showed that over 90% of companies still relied on product exports as their primary method, with direct investment and mergers and acquisitions accounting for a negligible share. With the advancement of the Belt and Road Initiative and the surpassing of foreign investment by outbound investment, Chinese companies began pursuing value chain upgrades, but brand awareness remained in its awakening stage.
The real turning point occurred after 2019. Sino-U.S. trade frictions, geopolitical changes, and intensified domestic market competition transformed brand globalization from a "nice-to-have" to a "matter of survival." Survey data from 2025 shows that 71.1% of companies have implemented brand globalization strategies, with this proportion reaching 88.9% for manufacturing companies; only 12.7% of companies said they "have no plans for internationalization." Meanwhile, the proportion of companies establishing overseas marketing institutions rose from 14.7% to 32.9%, and R&D institutions also doubled. More companies are no longer satisfied with OEM production but aim to build independent brand recognition in global markets.
Why do companies choose to go global? Wang Rui explained that 54.6% of companies cite "avoiding internal competition" as the main reason, while 42.4% say profit margins are under pressure. For many companies, going global is becoming a path to break away from "price competition" and shift toward "brand competition." Particularly among "specialized, sophisticated, distinctive, and innovative" enterprises, 57.8% choose to escape low-price competition through globalization and reconstruct their profit models. Regionally, Southeast Asia has become the main battleground, with 55.4% of companies prioritizing it and 66.2% accelerating their presence due to tariff risks.
However, transitioning from "selling globally" to "establishing globally" is not easy. Wang Rui noted that "selling globally" centers on product exports, relies on cost advantages and economies of scale, involves more unidirectional market relationships, and is more susceptible to tariff and exchange rate shocks. "Establishing globally," on the other hand, emphasizes value co-creation and niche building, relying on brand premium, technological innovation, and cultural recognition, with stronger anti-cyclical resilience and pricing power.
To cross this threshold, Chinese companies must first confront cognitive challenges. For a long time, "Chinese goods" have been deeply associated with the "cheap" label in the minds of overseas consumers. Transforming this into "high quality and cutting-edge technology" requires sustained and long-term brand investment. "Therefore, companies must abandon the standardized mindset of 'one product for the whole world' and establish a 'global brand architecture + local product matrix,' truly understanding the cultural contexts of different markets," Wang Rui said.
More importantly, there must be a shift from short-term arbitrage to long-termism. Wang Rui believes that brand asset accumulation often takes five to ten years. At the same time, global consumers, especially Generation Z, increasingly value brands' stances on issues such as climate change, social equity, and data ethics. A purely economic logic is no longer sufficient to support long-term brand growth.
The capability threshold is equally high. Companies need to build distributed organizations with "global resources + local decision-making," enhancing their global localization operational capabilities. Cross-cultural brand storytelling is not just about translating slogans but involves engaging local cultural forces in brand building. Supply chain management must shift from "efficiency first" to "resilience first." Companies also need non-market strategic capabilities to handle government relations, NGOs, and other non-market forces.
Wang Rui pointed out that while Chinese companies have rapidly grown in scale, compared to world-class enterprises, there is still room for improvement in governance transparency, accountability mechanisms, and cross-cultural leadership. These "soft powers" are precisely the key focal points for brand globalization.
Companies' expectations of policies are also changing. In the past, they sought "subsidies," but now they are turning to "rules, information, and security." Financial and tax support, simplified approvals, compliance guidance, collective expansion, and diplomatic protection have become more concentrated demands among entrepreneurs. In surveys, 49.7% of entrepreneurs still believe the future will "get better and better." This cognitive resilience also forms the internal driving force for Chinese companies to move from "big" to "strong."
Wang Rui believes that brand globalization is not a sprint but a marathon requiring patience, wisdom, and collaboration. From "selling globally" to "establishing globally," Chinese companies are entering the deep waters of global brand operations. Only by breaking path dependence in cognition, building systems in capabilities, and truly taking root strategically can Chinese brands stand firm, stable, and lasting in the global market.
