BEIJING/HONG KONG (Reuters) -China’s plan to subsidise some interest on loans aims to ensure households and businesses have more financial resources to reduce credit costs as Beijing looks to boost consumption, China’s Vice Finance Minister Liao Min said on Wednesday.
The policy will help increase consumption’s contribution to the country’s economic development, Liao said at a press conference.
“It will support domestic consumption to become a major drive force of the national economy,” he said.
On Tuesday, China announced it would offer interest subsidies for businesses in eight consumer service sectors, as well as for individual consumers. Eligible businesses and consumers can receive an annual interest subsidy of one percentage point on loans.
Economists have long urged Beijing to switch to a consumption-led economic model and rely less on debt-fuelled investment and exports for growth. Pressures from higher U.S. tariffs have heightened calls for a shift in long-term strategy.
Consumption of services in China has significant growth potential and the policy will help expand domestic demand and stabilise employment, Wang Bo, an official at China’s Ministry of Commerce, said at the press conference on Wednesday.
China’s major state-owned banks, including Industrial and Commercial Bank of China, China Construction Bank and Bank of China said on Wednesday they would actively implement the new subsidy policy.
(Reporting by Ziyi Tang and Jessie Pang; Editing by Muralikumar Anantharaman and Kate Mayberry)
