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China’s financial authorities have announced an extension of their policy aimed at subsidizing interest rates on consumer loans to stimulate spending. The original one-year program, which began last September, will now be in effect until the end of this year, replacing the initial August deadline. This extension comes as part of a joint announcement from the Ministry of Finance, the country’s central bank, and the National Financial Regulatory Administration.
Eligible consumers can receive a 1% interest rate rebate on qualifying personal loans for various purposes, including automobile purchases, medical expenses, elder care, education, travel, electronics, and home furnishings. For loans with interest rates below 2%, the subsidy is limited to half of that rate.
There have been three notable changes to the policy. First, the scope of coverage has expanded from seven key consumption categories to all types of consumer spending, including credit card bill installments—provided that the financial institutions issuing these loans can verify their authenticity and compliance.
Second, the maximum subsidies have been lifted: there is no longer a cap of CNY500 (about USD72) per transaction or CNY1,000 (around USD145) per borrower with a single lender. However, the annual borrowing limit from the same lender remains at CNY3,000.
Third, the list of authorized institutions offering subsidized consumer loans has been broadened. It now includes not only the original 21 nationwide banks but also city commercial banks, rural cooperative financial institutions, foreign banks, and consumer and auto finance companies with a regulatory rating of 3A or above.
According to a senior finance official, this interest rate subsidy initiative helps residents by providing direct financial incentives, lowering borrowing costs, and encouraging greater consumer spending. The ultimate goal is to boost domestic demand and support economic growth.
The policy has already shown positive results. By the end of November, nearly 1.6 million customers had signed agreements to receive interest rate subsidies from one of China’s major banks, based on reports from Securities Times earlier this year. Additionally, data indicated that China Construction Bank had finalized almost 1.3 million such agreements within the first two months of the policy’s launch, with the total outstanding loan balance reaching CNY37.9 billion (approximately USD5.5 billion), which is higher than the previous year.
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