China Prepares New Fiscal-Monetary Measures to Spur Domestic Demand

China is preparing a fresh batch of coordinated fiscal and financial policies for rollout in the second half of the year to stimulate domestic demand and support economic recovery. Speaking at a State Council Information Office briefing, Vice Minister of Finance Liao Min announced that the Ministry of Finance will collaborate closely with the People's Bank of China and financial regulatory agencies. The upcoming measures follow an August 1 expansion of interest rate subsidies covering corporate working capital and consumer installment purchases.

Broadening fiscal-financial synergy through targeted interest rate discounts directly reduces financing costs for small businesses and lowers the barrier for major household purchases. By combining fiscal subsidies with banking liquidity, policymakers aim to bolster consumer spending and revitalize business activity amid persistent domestic demand pressures.

China's Ministry of Finance is actively formulating a new set of coordinated fiscal and financial policies scheduled for rollout in the second half of the year, as Beijing steps up efforts to strengthen domestic demand and stabilize broader economic growth. Speaking at a press conference hosted by the State Council Information Office on August 21, Vice Minister of Finance Liao Min stated that the finance ministry is working alongside the People's Bank of China and financial regulatory authorities to establish a normalized, long-term mechanism for joint fiscal and monetary interventions. The objective, Liao noted, is to tangibly enhance the sense of gain for both enterprises and households. The upcoming measures will build on an earlier package of fiscal-financial synergy initiatives that took effect on August 1. According to Liao, that package introduced three major enhancements designed to amplify domestic consumption and ease corporate operational burdens. First, authorities broadened the scope of interest rate discount subsidies. In addition to existing eligible categories, the subsidies now apply to newly issued corporate working capital loans as well as new consumer credit card installment plans, specifically targeting big-ticket outlays such as vehicle purchases and home renovations. Second, the government expanded the network of executing financial institutions. The number of participating lenders authorized to handle interest-subsidized loans for micro, small, and medium-sized enterprises (MSMEs) and service-sector entities quadrupled, increasing from approximately 100 institutions to 400. Third, policymakers raised the maximum quota ceilings for qualified financing, enabling beneficiaries to secure larger amounts of subsidized credit. By subsidizing interest expenses directly through financial institutions, Chinese authorities aim to lower practical borrowing costs without resorting to blanket monetary easing. The coordinated approach leverages commercial banking distribution networks while fiscal funds absorb a portion of financing costs, concentrating financial relief on consumer durables and small-business liquidity.