China offers interest subsidies for loans to boost consumption
Interest subsidies will also be offered to individuals who take consumer loans, to reduce borrowing costs and stimulate consumer spending, said Chinese financial regulators.
People walk past a lane lined up with restaurants, at a shopping area in Shanghai, China, Sep 28, 2024. (Photo: Reuters/Tingshu Wang)
BEIJING: China will offer interest subsidies for businesses in eight consumer service sectors including catering and tourism, in a bid to support services consumption amid a slowing economy.
Eligible businesses can receive an interest subsidy of one percentage point on loans from 21 national banks, nine government departments, including the Ministry of Finance, said in a statement on Tuesday (Aug 12).
The maximum loan amount eligible for the interest subsidy for a single entity could be as much as 1 million yuan (US$139,095), the statement said.
The move aims to reduce financing costs "for service industry operators" and boost the consumer market, it added.
Chinese economists and policy advisers have called for stepping up support for the country's burgeoning services sector to boost consumption, which top leaders made a priority this year to spur growth amid US tariff disputes.
The central government and provincial governments will bear 90 per cent and 10 per cent of the cost of the subsidy funds, respectively. The subsidy period would not exceed one year, it said. The preferential policy applies to loan contracts signed between Mar 16 and Dec 31 this year.
The loans involved include fixed asset and working capital loans for enhancing business infrastructure and services capabilities.
Separately on Tuesday, financial regulators said they would offer interest subsidies for individuals who take consumer loans, to reduce borrowing costs and stimulate consumer spending.
Consumers can receive an interest subsidy of one percentage point on loans for single purchases of no more than 50,000 yuan (US$6,954) for goods including vehicles and electronics, according to a statement released jointly by three financial regulators.
Eighteen national banks and five online lending platforms, including Tencent's private lender WeBank and Chongqing Ant Consumer Finance, a unit of China's Ant Group, are among the lending institutions eligible for the preferential policy, the statement said.
In May, the central bank rolled out a 500 billion yuan re-lending facility for elderly care and services consumption, in a bid to encourage banks to offer financial support to the accommodation, catering, education and elderly care sectors.
China has also allocated 231 billion yuan in special treasury bonds for a consumer goods trade-in programme - out of the annual quota of 300 billion yuan - with a focus on home appliances, cellphones, and tablet computers.
