(Jan 20): China has announced a slew of incentives to spur investment and consumption, including a 500 billion-yuan loan guarantee facility to encourage private companies to borrow for expansion.
The loan guarantee programme will last for two years, aiming to help qualified private companies pay for spending such as equipment and raw material purchases and technology upgrades, the Ministry of Finance said in a statement on Tuesday (Jan 20).
An annual interest subsidy of 1.5 percentage points will be available for two years on loans taken by small- and medium-sized enterprises for purposes related to fixed assets or for participation in projects covered by the policy bank financing tools. Each borrower can get the subsidies on loans of up to 50 million yuan, according to a separate statement.
The announcements came a day after official data showed the Chinese economy again expanded in a two-speed pattern last year. While strong exports propped up industrial production, helping growth reach the official goal of around 5%, consumption remained sluggish and investment posted an unprecedented slump.
Top leaders have made boosting domestic demand their top economic priority in 2026. Until now, however, analysts were broadly expecting the authorities to take only a measured approach to stimulus this year given the resilience of exports, debt constraints and concerns over excess capacity in some industries.
The Ministry of Finance separately announced it’s extending a policy of providing loan discounts for consumers through the end of this year.
See also: China mulls M&A fund for tech innovation amid rivalry with US
Additionally, similar support for companies to upgrade their equipment will be expanded to include borrowing related to technological innovation. It’s also raising the ceiling of interest subsidies for services firms.
Uploaded by Arion Yeow
