State Subsidies Introduced for Personal and Service Sector Loans as Financial Institutions Urged to Deliver Targeted Credit Solutions

On July 31, Premier Li Qiang chaired a State Council executive meeting where a new policy was introduced to implement interest subsidies for personal consumption loans and loans to service sector businesses, as reported by CCTV News.

Industry experts interviewed by Cailian Press indicated that this initiative is expected to ease the borrowing burden for individuals with genuine consumption needs while demonstrating the government’s commitment to strengthening support for service-oriented consumption. According to a financial industry analyst, the policy reflects a dual-focus strategy targeting both demand and supply—by addressing personal consumption and operational credit needs of service providers through coordinated fiscal and financial efforts aimed at revitalizing the market. The analyst also emphasized the importance of financial institutions designing interest-subsidized loan products that align with this directive and ensuring funds are applied appropriately.

Su Xiaorui, a senior researcher at Suxi Zhiyan, characterized these interest subsidy measures for personal and service industry loans as a form of “national subsidy” within the financial domain. Zeng Gang, chief expert and director of the Shanghai Finance and Development Laboratory, noted that the policy would lower household credit and service-sector financing costs, unlocking consumer potential, stimulating market vitality, and helping offset fluctuations in external demand. This approach is also expected to support economic growth by promoting upgrades to consumption infrastructure and service capacities while enabling longer-term structural transformation.

The State Council highlighted that extending interest subsidies to personal consumption and service industry loans facilitates lower financial costs through fiscal-financial coordination and better activates consumer demand. Earlier this year, policy documents had already outlined the need for financial institutions to expand commodity consumption, develop service-based consumption, and nurture new consumption models. Su pointed out that the newly introduced interest subsidy measures represent a more detailed implementation of this overarching goal.

Dong Ximiao, chief researcher at Zhaolian, added that the fiscal subsidy policy not only reduces the cost of consumer credit for households but also enhances their willingness and ability to spend through financial leverage. It also decreases financing costs for service industry operators, encouraging them to offer higher quality products and services. The policy, he explained, would stimulate demand and supply concurrently and enhance synergy with financial policy to boost consumption and domestic demand.

A financial professional commented that the policy’s scope centers on both the personal consumption and service industry segments. For the demand side, he recommended that banks adjust loan amounts and durations to support major expenses such as car purchases, home appliance upgrades, and travel, and that fiscal subsidies aim to lower actual interest rates to below 3%. On the supply side, he proposed that interest subsidies of 1 to 2 percentage points be provided to small and micro-sized enterprises in sectors like catering, housekeeping, and childcare, depending on the loan term.

The State Council also underlined the importance of ensuring the effective implementation of the interest subsidy policy by improving inter-agency coordination, simplifying administrative procedures, accelerating execution, and strengthening oversight to guarantee the efficient and appropriate use of fiscal funds.

Su advised that the implementation phase should be tailored to specific consumption scenarios, with detailed rules crafted by category and stringent financial oversight enforced. Zeng echoed this, stating that financial institutions must tighten risk controls to ensure compliance in fund usage. This includes rigorous review of loan purposes, contractual stipulations, and post-loan tracking to ensure that funds are strictly used for personal consumption or service sector operations. He also called for collaboration with fiscal and regulatory departments to monitor the disbursement of subsidized funds, maintain complete records, and ensure transparency and efficiency throughout the process.

According to another financial industry insider, banks should precisely target the needs of consumers by identifying key spending areas like car purchases, home appliances, and tourism, and offering matching loan products with clearly defined post-subsidy interest rates, limits, and durations. Application processes should also be streamlined—such as allowing online submissions and fast approvals—to lower the barrier to access credit.

For service sector operators, the insider suggested banks focus on small and micro enterprises in catering, domestic services, and childcare, especially those severely affected by the pandemic or with expansion plans. These businesses should be proactively identified, provided with tailored financing, and fully informed about the specific terms of the interest subsidy policy, including rates and application requirements.

Since the beginning of the year, financial institutions have accelerated the rollout of measures designed to stimulate consumption. According to several institutions interviewed by Cailian Press, they have responded promptly to policy directives by unleashing consumer potential. For instance, Mashang Consumer Finance has introduced products such as “Consumption Upgrade Loan,” “Comfortable Life Loan,” and “Green Consumption Loan,” tailored to meet emerging consumption demands.

A representative from a joint-stock bank told Cailian Press that their institution has developed a refined roadmap to support consumption via a combination of credit support, scenario-based discounts, and green incentives. These efforts aim to reduce consumer costs and strengthen spending intent.

In June, six government departments, including the People's Bank of China, jointly issued the "Guiding Opinions on Financial Support for Boosting and Expanding Consumption." This directive supports eligible consumer finance, auto finance, and financial leasing firms in issuing financial bonds to diversify funding channels and expand consumer credit availability. Cailian Press noted that in the past month, many of these institutions have issued financial bonds in quick succession.