Customers check out new-energy vehicles at a large shopping mall in Jinhua, East China's Zhejiang Province on February 23, 2025. According to data from the National Development and Reform Commission, China issued 150 billion yuan ($20.7billion) in ultra-long-term special government bonds in 2024 to support trade-in programs for consumer goods, boosting sales of more than 1.3 trillion yuan. Photo: VCG

China's interest subsidies for qualifying personal consumption loans, the country's latest effort to boost consumption, took effect on Monday, with multiple institutions announcing implementation measures to lower household borrowing costs and boost consumer spending, while emphasizing the qualification process.

China Merchants Bank said in a notice on Monday that the scope of the subsidy will be strictly defined in accordance with the policy. Customers applying for subsidized personal consumption loans must follow the bank's procedures and sign a supplementary agreement on interest subsidies either at the time of borrowing or after loan disbursement.

China Minsheng Bank said on Monday that it will review authorized account transactions through system recognition or manual verification. For personal loan transactions deemed to meet the requirements for the government interest subsidy, the bank will grant subsidies in accordance with the policy.

Industrial Bank said that borrowers seeking the subsidy must sign an agreement and authorize the bank to review their loan accounts to identify eligible spending. Transactions automatically recognized by the system will be subsidized directly, while those not identified can be submitted with valid invoices for manual review, after which the subsidy will be granted, according to the bank.

Financial institution Ant Consumer Finance, one of the designated institutions, has adopted an approach that differs slightly from banks. 

As its credit business Huabei already offers a 41-day interest-free period, users do not incur any charges during that time. According to media reports, the government subsidy will mainly apply to purchases made through Huabei's installment service, which is now being gradually rolled out to users. 

The subsidies were jointly announced by the Ministry of Finance, the People's Bank of China and the National Financial Regulatory Administration. The Ministry of Finance said that designated institutions include six state-owned banks — Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank among them — 12 national joint-stock commercial banks, and five consumer lending firms such as Ant Consumer Finance. 

The subsidies are aimed at enhancing the role of fiscal funds in stimulating consumption, reducing household borrowing costs, unleashing consumer spending potential and supporting a faster economic recovery.

In recent years, as consumption upgrades have gathered pace, big-ticket items such as home appliances, automobiles and electronic products have entered a replacement cycle, Bian Yongzu, executive deputy editor-in-chief of Modernization of Management magazine, told the Global Times on Monday. "For example, home appliances are moving toward smart and energy-efficient models, which come at higher prices. Consumer loans can help meet such demand."

Bian noted the rollout of the banks' measures not only encourages households to boost spending but also creates greater market space for manufacturers, enabling firms to increase research and development investment, lift profitability and foster a virtuous cycle. This is expected to energize capital markets and boost local fiscal revenues, delivering benefits to consumers, businesses and local governments alike, he said.

In July, China's consumer market maintained a stable growth trend, with sales of essential goods and upgraded products rising steadily, according to the National Bureau of Statistics (NBS). Trade-in programs for certain items sustained rapid growth, and new forms of consumption gained traction.

Retail sales reached 3.88 trillion yuan ($534 billion) in July, up 3.7 percent year-on-year. For the January-July period, retail sales rose 4.8 percent, 1.3 percentage points higher than both the same period last year and the full-year growth rate in 2024, the NBS said.

Insiders said that the policy's impact is worth watching. Incorporating widely used consumer credit products such as Huabei, which have strong penetration rates among young people, will not only lower borrowing costs and ease spending pressure, but also enhance public confidence and willingness to use credit, generating a broader and more sustained boost to consumption.