China has increased a financial stimulus to encourage consumers to scrap their old vehicles and buy new ones, according to a circular issued on Friday.

Subsidies for trade-ins of new energy passenger vehicles have doubled from 10,000 yuan (1,399 U.S. dollars) -- a figure stipulated in an April document -- to 20,000 yuan, per the circular, which was released by the Ministry of Commerce and six other government departments.

Subsidies for trade-ins of fuel passenger vehicles have been raised from 7,000 yuan to 15,000 yuan.

The new policy applies to all subsidy applications submitted between April 24 this year and Jan. 10, 2025.

Nearly 5 million new energy passenger vehicles and 6.57 million fuel passenger vehicles were sold to individual consumers in China from January to July, with those figures respectively surging 33.7 percent and dipping 15 percent year on year, industry data shows.

A lack of effective demand is one of the challenges facing the Chinese economy, and policymakers are moving to promote stable growth in consumer spending. The 2024 government work report pledged to encourage consumer goods trade-in programs among other measures to boost domestic demand.