A skyline view of Shanghai’s Lujiazui area on July 1, 2025. Photo: VCG
China’s central government will offer interest subsidies for consumption loans for individuals and business entities in the consumer services sector for the first time, as a part of the country’s new policy toolkit to stimulate consumption, a finance official said on Wednesday.
Liao Min, vice minister of finance, told a press briefing on Wednesday that the measures represent another innovative experiment in coordinated fiscal and financial support for driving domestic consumption. He said the subsidies can be combined with existing consumer goods trade-in programs for home appliances and other consumer goods, which would deliver more benefits to the public in their consumption activity.
The remarks came after three government departments on Tuesday announced a plan to provide subsidies on qualified personal consumer loans with a maximum of 3,000 yuan ($417.5) per person.
The plan aims to reduce the cost of consumer credit for residents, help unleash their consumption potential, and promote faster and better economic development.
The provisions, outlined in a statement by the Ministry of Finance, will be implemented from September 1 to August 31, 2026. During this period, individuals may receive interest subsidies on portions of personal consumption loans, excluding credit card business, issued by the lending institutions — provided the funds are actually used for consumption and the transactions can be verified through a loan disbursement account.
Also, on Tuesday, the Ministry of Finance, together with eight other government agencies, unveiled a subsidy policy action plan to offer loan interest subsidies for eight categories of eligible services sector businesses. The action plan targets services sector businesses in the categories of catering and accommodation, healthcare, eldercare, childcare, housekeeping, culture and entertainment, tourism and sports, according to the ministry.
To qualify for the subsidy, loans must be extended between March 16 and December 31 of this year – and loans must be used for improving consumption infrastructure or services supply capacity.
Under the plan, borrowers may receive interest rebates of 1 percentage point annually for no more than one year, with the central government covering 90 percent of the payment and provincial authorities responsible for the remaining 10 percent. The maximum loan amount eligible for subsidies is 1 million yuan ($140,000).
The two programs are part of China’s broader efforts to stimulate services consumption and cultivate new growth levers.
The new policies drew an instant response from major banks in China such as China Construction Bank, Bank of China, Bank of Communications and Agricultural Bank of China, which announced measures to ensure the implementation of the personal consumption loan interest subsidy policy. On Wednesday, the Bank of China and China Construction Bank announced plans to subsidize eligible personal consumer loans starting September 1.
Song Xiangqing, vice president of the China Commerce Economy Association, called the package a “precision tool” for stimulating the economy. “By lowering financing costs for service providers, the policy can accelerate domestic consumption by delivering better consumer experiences,” he told the Global Times.
“Such moves can be seen as targeted macroeconomic lever set to turbocharge industry upgrades and consumption,” Song said, adding that the targeted loan interest subsidy for service-sector firms is expected to act as an “accelerator” for boosting their quality and efficiency – spurring service upgrades, sharpening industry competitiveness, and enhancing consumer experiences.
The subsidy plans announced on Tuesday will reduce service sector financing costs, unlocks consumer spending, and propels a broad-based, upward economic growth, Dong Ximiao, chief research fellow at Merchants Union Consumer Finance Co, told the Global Times on Wednesday.
“For consumption, loan subsidies can reduce residents’ borrowing costs, stimulate them to increase consumption expenditure, help expand overall demand; for the service industry, it can reduce financing costs, stabilize cash flow turnover, support employment stability and industrial recovery, and create a ripple effect that drives the growth,” Dong said.
