Vendors are busy stocking up on fruits at a wholesale market in Jinhua, East China’s Zhejiang Province on December 22, 2024. With the New Year’s Day and the Spring Festival holidays approaching, fruit sales have entered the pre-holiday peak season and fruit vendors are making preparations to meet holiday consumption demands. Photo: VCG

China's National Administration of Financial Regulation (NAFR) issued a notice on Friday, urging financial institutions to develop consumer finance to support the consumption market, a fresh move by the Chinese financial regulator to boost consumption.

"In order to implement the spirit of the Central Economic Work Conference and to fulfill the major decisions of the Central Committee of the Communist Party of China and the State Council for a special action to boost consumption, the NAFR has issued a notice requiring financial institutions to develop consumer finance, support the enhancement of consumption, better meet financial needs in the consumption sector, and effectively enhance the sense of gain and satisfaction among the people," according to a statement on its website. 

Meanwhile, the Supreme People's Court (SPC) held a press conference on Friday to release the "Supreme People's Court interpretation on issues concerning application of law to civil disputes over prepaid consumption." The SPC also publicized six typical cases involving prepaid consumption.

It aims to protect consumer rights by addressing issues such as business owners absconding with funds, unfair contract terms, and non-refundable payments frequently raised by the public regarding prepaid consumption. The SPC stated that it will continue to strengthen communication and cooperation with administrative authorities to effectively regulate practices that harm consumer rights and disrupt market order in the prepaid consumption sector.

In addition, a press conference was also held by NAFR to articulate key policy measures proposed to optimize consumer finance policies, including enriching financial products, facilitating financial services, and creating a favorable consumption environment.

Among the three specific measures, financial institutions are encouraged to enrich and improve financial products and services, focusing on expanding commodity consumption, developing service consumption, and nurturing new types of consumption, according to the notice.

The measures came just days after China's Ministry of Commerce rolled out more practical and effective measures to boost domestic consumption, with dedicated measures to bolster commodity and service consumption, Commerce Minister Wang Wentao said at a press conference during the two sessions.

Zheng Shanjie, head of the National Development and Reform Commission, said at a news conference on the sidelines of the two sessions that the country will soon roll out a special action program to boost consumption. 

This year's Government Work Report also said that China will launch special initiatives to boost consumption in 2025, including issuing ultra-long special treasury bonds worth 300 billion yuan ($42 billion) to support consumer goods trade-in programs, and creating a full range of new consumption scenarios to accelerate the growth of digital, green, smart, and other new types of consumption.

Consumption, as an important part of the product and service lifecycle, is expected to provide growth impetus to the economy and create new opportunities for both domestic and international businesses in China, Tian Yun, an economist based in Beijing, told the Global Times on Friday, noting that China's government has been taking measures to boost domestic consumption, which is seen as a key driver of economic growth. 

Tian further pointed out that as China's economic growth model is undergoing a structural adjustment, the role of investment in economic development is gradually being replaced by consumption. However, the growth of consumption cannot be achieved overnight, as it requires sustained momentum.

To this end, special attention should be given to nurturing digital, green, and intelligent consumption scenarios, with the aim of meeting personalized and diversified financial needs. The notice also emphasized the need to strengthen digital empowerment to enhance the adaptability and convenience of consumer financial services. 

Additionally, financial institutions are urged to increase credit support for consumer service industries such as wholesale and retail, accommodation and catering, culture and tourism, education and training, and aged care.

Efforts should be made to optimize consumer finance management. Banking institutions are encouraged to increase personal consumer loan disbursements while ensuring risk control. They are also asked to reasonably set loan amounts, terms, and interest rates, and optimize resource allocation, according to the notice.

Among the key tasks, the NAFR called for the improvement of due diligence exemption requirements for personal consumer loans and the exploration of online credit card issuance and activation.

Banking institutions are encouraged to work with borrowers who have good credit records but face temporary difficulties to reasonably adjust loan repayment terms and frequencies, and to standardize consumer loan contract terms and clearly disclose the total financing costs, according to the NAFR.

The notice also called for the use of financial product inquiry platforms and consumer protection services to facilitate consumer access. 

In addition, efforts will be made to improve payment convenience in consumption scenarios, especially for groups such as the elderly and foreign visitors, according to the NFRA. It also called for the improvement of diversified dispute resolution mechanisms for consumer finance and increased coordinated efforts to crack down on market disorder and consumer rights violations.

The overall consideration is to balance supply and demand, provide moderate discounts for long-term and large-scale consumption needs, offer reasonable assistance to borrowers facing temporary financial difficulties, and launch special actions to support consumer goods trade-ins and fiscal subsidies for consumer loans. "The goal is to create a favorable consumption environment and enhance consumer satisfaction," an official from the NAFR told reporters.

The State Administration for Market Regulation of China, together with four other departments, in February issued an action plan on optimizing the consumption environment from 2025 to 2027, which is intended to further boost consumer confidence and stimulate economic vitality. The 19-point action plan prioritizes work in five sectors -- improving quality of consumer market supply, regulating market order, enhancing consumer rights protection, consumption market co-governance and setting leading roles to improve the consumption market. 

Global Times