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Chinese financial institutions have requested nearly CNY60 billion (USD8.4 billion) in loans from a CNY500 billion (USD70.3 billion) relending program launched in May to support service consumption and elderly care, according to the head of credit markets at the People’s Bank of China. This initiative aims to encourage spending in crucial sectors as the government intensifies efforts to stimulate economic activity.
In May, the central bank introduced a CNY500 billion relending mechanism focused on sectors such as hospitality, dining, tourism, and education. So far, the loans have benefited nearly 4,000 businesses and funded over 5,700 projects, explained Yang Hong during a press conference.
Another relending scheme established in April last year for technological innovation and transformation has now grown to CNY800 billion (USD112.5 billion). In the first half of this year, it supported nearly 100 equipment upgrade projects within the service sector, with loan agreements totaling CNY11.9 billion (USD1.6 billion).
Meanwhile, lending activity continues to pick up. New loans to key service consumption areas jumped 62 percent in the first seven months compared to the same period last year, reaching CNY164.2 billion (USD23.1 billion).
Household consumption loans, excluding mortgages, stood at CNY21 trillion (USD2.9 trillion) as of July’s end, reflecting a 5.3 percent increase year-over-year. Loans to essential service sectors also increased by 5.3 percent to CNY2.7 trillion (USD392.5 billion). Additionally, financial institutions are diversifying their funding sources, with auto finance firms and others issuing CNY21.5 billion in financial bonds and CNY48.4 billion in asset-backed securities during the first seven months to boost credit availability.
Recently, the Ministry of Commerce and eight other government departments introduced new measures aimed at stimulating service consumption. The strategy, outlined in a document titled “Several Policy Measures for Expanding Service Consumption,” leverages both fiscal and financial tools.
The plan involves directing government funds toward developing service infrastructure and encouraging market-oriented investments through innovative trade in services. At the same time, the People’s Bank of China and other agencies will motivate financial institutions to create new loan products, establish fair pricing policies, and share lending risks with local governments via compensation funds. For service providers that support livelihoods, loans will also feature interest subsidies.
According to Dong Ximiao, chief researcher at Merchants Union Consumer Finance, these measures are expected to lower borrowing costs, stimulate demand, and improve the structure of service spending. Funds will also be channeled into underserved areas such as elderly and childcare services, as well as fast-growing sectors like digital consumption, entertainment, and sports, to further boost service engagement.
The People’s Bank of China will collaborate with other government agencies to ensure the effective implementation of these policies and that benefits reach both businesses and consumers.
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