PBoC: accelerate formulation of medium and long-term consumption development strategy and strengthen protection for low-income groups

PBoC: accelerate formulation of medium and long-term consumption development strategy and strengthen protection for low-income groups

China has introduced a year-long plan to offer interest subsidies for personal consumer loans, aiming to bolster household spending power and stimulate domestic demand. The initiative, launched on September 1, 2025, and set to run until August 31, 2026, is part of Beijing's broader efforts to unlock household spending potential [1].

Under this plan, individuals who take out consumer loans for purchases, including single transactions below 50,000 yuan (US$6,958) and higher amounts for key sectors such as cars and education, will have part of their interest costs covered by the government. The subsidy will cap at half of the contracted loan interest rate and will be funded by the central government covering 90% of the cost, with provincial governments covering the remaining 10% [1].

The subsidy aims to lower the cost of consumer credit for households and encourage more spending. It marks the first time the central government has subsidized individual consumer loans. The plan targets various sectors, including autos, elderly care, childbirth, education, culture and tourism, home furnishing and renovation, electronics, and healthcare [2].

Experts believe this policy will ease debt burdens, support consumption, and stimulate economic recovery. It aligns fiscal and monetary measures to lower borrowing costs and encourage households to use credit to improve living standards. The subsidy ratio of one percentage point is about one-third of current commercial bank rates for such loans [2].

The People's Bank of China (PBoC) has emphasized the importance of accelerating the formulation of medium and long-term consumption development strategies and strengthening protection for low-income groups. This new subsidy plan is expected to help achieve these goals by making consumer loans more affordable and accessible, thereby boosting consumption and economic growth [1, 2].

References:
[1] https://www.scmp.com/economy/china-economy/article/3321647/china-seeks-bolster-demand-subsidising-interest-costs-consumer-loans
[2] https://www.chinadaily.com.cn/a/202508/14/WS689d3593a310b236346f18bd.html