''Trade-in'' is Currently the Main Driver of the Chinese Elevator Market

According to China's Ministry of Commerce, in March 2024, the country issued an action plan to promote large-scale equipment replacement and upgrades and implement a trade-in program.

The program aims to upgrade China's industrial and household equipment, eliminating old machinery that consumes high energy or causes significant pollution. Concurrently, Beijing also desires to encourage consumers to spend and businesses to invest more heavily.

The program spans from heavy industries like steel and petrochemicals to the installation of new elevators in apartment buildings and encouraging consumers to discard old washing machines for new, more water-efficient ones... Stimulating consumer demand is one of the major policies and a key driver to help the world's second-largest economy achieve its GDP growth target of 5% in 2025.

Mr. Guo Chaoxian, a researcher at the Institute of Industrial Economics under the Chinese Academy of Social Sciences (CASS), stated that the above measures have promoted circular economic development, attracted foreign investment and innovation resources, and formed new business models. Thereby, the green and smart upgrade process is accelerated, helping to improve safety levels as well as the resilience of industrial and supply chains.

Customers apply for the Chinese government's trade-in program at a store in Fuyang District, Hangzhou City, Zhejiang Province, east China - Photo: Xinhua

Elevator Industry Clearly Benefits from Urban Renovation Wave

Within this trend, the elevator industry is assessed as one of the sectors clearly benefiting, especially from the wave of renovating old housing areas.

Kone Corporation (Finland), with over 60,000 employees globally, is actively participating in national programs in China through modernizing elevators according to new standards, focusing on old residential areas – where the elderly face many difficulties in daily mobility.

Mr. Joe Bao, Executive Vice President of Kone Greater China, said: “Last year, Kone implemented one of the largest elevator modernization programs in China funded by bonds, in Kunshan city (Jiangsu province). This project set a new benchmark for the industry and became a reference model at the national level. Currently, the model has been replicated in over 40 cities across China.”

According to Mr. Bao, integrating smart technologies like AI monitoring allows for early risk detection, while big data applications and AI analysis help shift from passive maintenance to predictive maintenance. Furthermore, digital connection with government management platforms also contributes to enhancing supervision and transparency.

Thanks to these factors, Kone recorded double-digit growth in elevator modernization orders in China this year.

In late 2020, China also announced a Plan to install elevators for three million old apartments with the expectation of creating tens of millions of jobs and boosting the economy.

Otis Expands in Renovation and Upgrade Sector

Also highly appreciating the potential of the Chinese market, Ms. Judy Marks – Chair, CEO, and President of Otis Worldwide Corp (USA) – affirmed that China remains one of the group's most dynamic and promising markets, especially in the service and elevator renovation sector.

In early September 2025, Otis signed a contract to upgrade 106 elevators at a residential area in Baoshan District, Shanghai. Just a few days later, this enterprise continued to win bids for elevator renovation projects in Shijiazhuang (Hebei province) and Hefei (Anhui province).

According to the plan, nearly 200 degraded elevators in these two cities will be comprehensively modernized, marking a new expansion step in Otis's equipment renewal activities in China.

Ms. Judy Marks stated that from improving accessibility, promoting urban reconstruction to enhancing safety thanks to AI and improving operational experience, Otis aims to develop mobility solutions closely linked to user needs, thereby contributing to a safer and more sustainable urban environment.

According to the China Elevator Association, the country currently operates about 15 million elevators and escalators, adding nearly 1 million new units each year.

Confidence of International Corporations in China's Policy Direction

Not only the elevator industry, but many other international enterprises also highly appreciate China's policy direction. Ms. Adele Tao, CEO of Lixil Water Technology Greater China (Lixil Group, Japan), specializing in water technology and building materials, believes that China's promotion of "new quality productive forces" is changing the development methods of many industries.

According to her, these policies create strong motivation for enterprises to innovate and upgrade. “The Chinese Government's new initiatives are sending positive and clear signals to the global business community,” emphasized Ms. Adele Tao – who is also Senior Vice President of Lixil.

She also stated that China is currently not only a manufacturing and innovation hub but also a large consumer market with increasing demand for quality, smart, and sustainable products. Lixil will continue to develop and launch products suitable for local needs first, many of which have been and are successful in the international market.

Last July, this Tokyo-headquartered group opened an International Competence Center in Guangzhou (Guangdong province) to support new product development and shorten time-to-market, especially for components and assemblies sourced from key suppliers in China.

'Trade-in' - Short-term Stimulus or Future Barrier?

China has long repeatedly mentioned the concept of "dual circulation strategy," in which growth is led by two "circulations": the external circulation linked to global trade and investment, and the internal circulation based on domestic demand and autonomy in key technologies.

Stimulating consumer demand is seen as a crucial factor helping China achieve its 5% GDP growth target in 2025. According to the International Monetary Fund (IMF), this growth rate remains within a feasible scenario.

However, entering 2026, the outlook becomes more cautious. Investment bank ING (Netherlands) suggests that to achieve the GDP scale target of about 170 trillion RMB by 2030, China needs to maintain a growth rate of 4-5% in the coming years. Therefore, Beijing may continue to set a growth target of "around 5%" for 2026, marking the fourth consecutive year maintaining this level.

Nevertheless, the possibility of the target being adjusted down to "above 4.5%" is increasing, because since 2011, China has never kept the same growth target for more than three consecutive years.

ING forecasts China's economic growth will slightly decrease to about 4.6% in 2026. The main cause comes from weak consumer confidence, linked to the prolonged decline of the real estate market, while external demand prospects remain uncertain.

After more than three decades playing a key growth driver role, investment in China is facing a new turning point as the fixed asset investment index – including housing, infrastructure, and factories – declined for the first time since the late 1980s. From January to October 2025, this index decreased by 1.7% year-on-year, with October alone recording a double-digit decrease.

According to ING's analysis, consumption is showing signs of stalling as the positive impact of the "trade-in" policy gradually weakens, even risking shifting from a push to a drag force. In the past few years, this program has contributed to strongly stimulating demand for automobiles, home appliances, consumer electronics, and furniture. However, fundamentally, this is a policy of "pulling future consumption to the present" and is difficult to maintain effectiveness in the long term.

Reality shows that households may decide to buy a new car or washing machine when subsidized, but it is difficult to repeat this behavior in subsequent years. Typically in the auto industry, after a period of strong sales growth in the first years of policy implementation, consumption volume has stalled in later years. A similar pattern is appearing in the home appliance segment in the fourth quarter of 2025 and will likely spread to consumer electronics and furniture in 2026.

Conversely, ING also points out that China is facing clearer deflationary pressure in 2025, as overcapacity triggers fierce price competitions.

Declining profit margins force businesses to cut costs, lower wages, and lay off workers, thereby eroding household confidence. Weakened confidence leads to increased savings propensity, reduced domestic consumer demand, and this spiral turns back, exacerbating overcapacity.

Other factors contributing to this negative spiral include the real estate recession and the "trade-in" policy, which, although supporting consumption in the short term, also contributes to creating additional downward price pressure on many commodity groups. According to ING, most of these problems are likely to remain challenges in the coming years.

It can be seen that the "trade-in" policy has been playing the role of an effective stimulus tool, contributing to supporting consumption and growth in the context of weak confidence. However, when fundamental factors such as overcapacity, deflationary pressure, and the weakening of the real estate market are not resolved, "trade-in" is likely to only have a short-term impact, rather than creating sustainable momentum for the medium term of the economy.