China’s new loan subsidy includes a split between borrowing above and below 50,000 yuan – something analysts say is designed in part to spur car sales.
Shoppers can accumulate up to 3,000 yuan in interest subsidies from each lending institution, but for loans under 50,000 yuan, the maximum benefit is capped at 1,000 yuan.
Cai from SWUFE said the differentiated scheme favours big-ticket items such as vehicles. But he cautioned that a 3,000 yuan subsidy cap may have limited influence on buyers, especially those considering higher-end models.
He pointed to lessons from the government’s trade-in programme, which offered subsidies of up to 20,000 yuan for new energy vehicles (NEVs). That scheme initially lifted demand, but sales growth has since cooled.
According to the China Association of Automobile Manufacturers, monthly growth in NEV sales slowed from 87 per cent at the start of the year to 27.4 per cent in July.
BYD’s August sales were flat year-on-year at 373,600 units – evidence, analysts say, that subsidies alone cannot sustain momentum for market leaders.
Cai estimated the new loan subsidy could lift NEV sales by 5 to 8 percentage points, contributing about 0.5 percentage points to overall retail sales growth.
“To achieve a stronger impact, the policy needs to be combined with carmaker discounts, investment in charging infrastructure and supportive licence plate rules,” he added.
David Zhang, secretary-general of the International Intelligent Vehicle Engineering Association, said the subsidy not only eases borrowing costs for households but also supports banks and manufacturers.
“This is a good move because it lowers consumer debt burdens, boosts the circulation of funds, and helps companies expand sales channels – all of which benefit economic growth,” he told CNA.
Alongside household loans, Beijing has launched a separate subsidy scheme for service-sector firms. Covering eight areas – catering, healthcare, childcare, elderly care, household services, tourism, culture and sports – it lets companies borrow up to 1 million yuan, with interest subsidies capped at 10,000 yuan.
Officials say the measure is intended to cut financing costs, encourage investment in services and support jobs in labour-intensive industries.
Wang Bo, deputy director of the department of trade in services and commercial services at the Ministry of Commerce, said the policy works on both the demand and supply side.
“It will enhance households’ ability to consume while also expanding the supply of quality services. In particular, it is expected to boost sectors closely tied to daily life such as healthcare, elderly care and childcare,” he said.
https://www.channelnewsasia.com/east-asia/china-loan-subsidies-5343871
