China’s finance ministry, commerce ministry, the People’s Bank of China and the financial regulator have extended a fiscal interest‑subsidy programme for service‑sector loans through December 31, 2026, deepening a package of measures aimed at reviving household consumption. The notice, effective January 1, 2026, formalises that loans issued between March 16 and December 31, 2025 will still be governed by the earlier 2025 implementation rules, and leaves open the possibility of further extensions after 2026.
The policy raises the per‑borrower cap on subsidised new loans issued in 2026 to RMB 10 million and sets an annual subsidy rate of 1 percentage point for up to one year. Central and provincial governments will split the subsidy cost 90:10, signalling Beijing’s intent to use central fiscal firepower to leverage bank lending into priority consumption and services sectors.
The scope of eligible activity has been broadened beyond the eight original consumption areas — catering and accommodation, health, eldercare, childcare, domestic services, cultural entertainment, tourism and sports — to include three new categories: digital, green and retail. The document maps eligible sub‑sectors to existing national industry classifications and the 2025 green finance catalogue, covering internet services, digital content, certain property management and green transport and logistics activities, and retail trade.
A wide range of banks have been designated as implementing agents, from policy banks and the big state commercial banks to 3A‑rated city commercial banks, provincial rural banks and qualified foreign banks. The notice also tightens delivery mechanics: provincial finance departments will jointly vet applications with industry and banking counterparts through a coordinated “one‑stop” review, with an emphasis on digitalised, faster approvals and clearer timelines for settlement and final clearing of subsidy funds through 2027–28.
Operational rules stress stronger oversight and anti‑abuse enforcement. Subsidy payments will be made through banks when interest is collected and borrowers will be notified by SMS or app; loans used for improper purposes, non‑performing loans or cases of collusion will lead to subsidy clawbacks and potential disqualification for banks. Monthly reporting requirements between banks, provincial finance departments, the PBOC and the financial regulator are intended to reduce double‑dipping and improve traceability.
The extension is a targeted fiscal nudge to lift domestic demand and accelerate the pivot from an investment‑led to a consumption‑driven growth model. By lowering borrowing costs for service providers and retailers, Beijing hopes to increase supply of higher‑quality services, diversify consumption scenarios and coax hesitant households to spend. The effectiveness will hinge on implementation at the provincial level, the willingness of banks to lend into higher‑risk service segments, and the capacity of local finances to absorb the matching share of costs.