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China has announced a new interest subsidy program for personal consumer loans in an effort to stimulate domestic spending. Borrowers can receive up to CNY 3,000 (approximately USD 420) in total subsidies at select lending institutions.
To qualify, individuals must take out personal consumer loans—excluding credit cards—from approved lenders between September 1 of this year and August 31 next year. The borrowed funds must be used solely for consumption purposes, with all transactions traceable, as outlined in a joint policy by the Ministry of Finance, the central bank, and the financial regulatory authority.
Eligible purchases include single transactions under CNY 50,000 (around USD 6,965). Larger transactions of CNY 50,000 or more are permissible only if related to autos, elderly care, childbirth, education and training, tourism, home furnishings, electronics, or healthcare.
These subsidies aim to lower the effective cost of consumer credit, encouraging people to leverage financial tools to increase spending, improve living standards, and spur demand among lenders and consumers alike.
The program will subsidize 1 percentage point of the annual interest rate on qualifying loans, capped at a maximum of 50% of the agreed-upon interest rate. Most of the funding—about 90%—will come from the central government, with provinces covering the remaining share.
The participating financial institutions include six major state-owned banks, 12 national joint-stock banks, and five consumer finance companies.
This approach is expected to make purchasing cars more affordable for consumers, potentially boosting sales in the automotive sector, according to industry analysts.
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