BEIJING, Sept. 8, 2025 /PRNewswire/ — On September 1, policies such as interest subsidies for qualifying personal consumption loans officially took effect, according to the Xinhua News Agency.
A netizen from people.cn asked recently that from the earlier large-scale equipment upgrades and trade-in of consumer goods to today’s “dual subsidies” – interest subsidies for personal consumption loans and loan subsidies to service sector businesses – what real benefits can these policies deliver? And how significant will their impact be in stimulating consumer demand?
Expanding domestic demand and boosting consumption have become key priorities in China’s current economic agenda. As numerous measures have been rolled out, the public remains highly attentive to their effectiveness.
On July 30, 2025, a Communist Party of China (CPC) Central Committee Political Bureau meeting stressed the need to effectively unleash potential in domestic demand, and encourage goods consumption while fostering new growth drivers of services consumption. Against this backdrop, the launch of the “dual subsidies” policy has been described as “timely, precise, and steady.”
So, what tangible benefits will these measures deliver?
Take two simple examples. If a consumer takes out a loan of 200,000 yuan ($28,039) for home renovation, furniture, and appliances, with an assumed annual interest rate of 3 percent, he would save up to 2,000 yuan in interest thanks to the 1-percentage-point subsidy. Similarly, if a restaurant applies for a 1-million-yuan loan to upgrade its kitchen and facilities, the subsidy would save the business around 10,000 yuan in interest costs.
From daily dining to major household appliances, from essential spending in childcare, elderly care, and healthcare to developmental and leisure spending on education and travel – all of these categories are covered by the loan interest subsidy policy, which spans a wide range of spending. While a 1-percentage-point reduction may not sound large, when it translates into direct savings for households and businesses, the effect is significant.
But will these subsidies really spur consumer lending?
Let’s look at the data. According to data from the People’s Bank of China, the central bank, by the end of 2024, the outstanding balance of household consumption loans, excluding house mortgages, reached 21.01 trillion yuan, marking a year-on-year growth of 6.2 percent. Meanwhile, a study by financial regulators shows that after the introduction of consumer finance products, borrowers’ spending increased by 16 to 30 percent, while participating merchants’ sales increased by about 40 percent.
Yet gaps remain in consumer credit supply. A survey by Southwestern University of Finance and Economics indicates that the gap between households’ demand rate for consumer credit and their actual participation rate widened from 2.5 percentage points in 2019 to 5.3 percentage points in 2021.
The “dual subsidies” policy not only covers major household spending but also cuts borrowing costs, helping to ease the mismatch between supply and demand in consumer credit services. Coupled with the nationwide trade-in subsidy program, the combined benefits will be even greater, unlocking stronger demand from middle-income groups. At present, financial institutions across the country have already begun implementing related services, and the policy’s impact is eagerly awaited.
From strengthening the large-scale equipment upgrades and trade-in of consumer goods to gradually implementing free preschool education and childcare subsidies, from establishing a 500-billion-yuan re-lending facility for service consumption and elderly care to the latest “dual subsidies,” fiscal, financial, industrial, and livelihood-oriented measures have all been coordinated since last year. Together, these interlinked policies aim to build household confidence and willingness to spend – reflecting a “heartfelt” approach.
Consider the consumer goods trade-ins. By the first half of 2025, government subsidies under the policy had spurred more than 2.9 trillion yuan in new consumption, benefiting around 400 million people. Since the start of 2025, 82,000 retail outlets nationwide have participated in the trade-ins for electric bicycles, resulting in the replacement of more than 9.05 million new vehicles.
But how can these “heartfelt” policies genuinely win over consumers? On the one hand, product quality must be improved. On the other, consumption order must be regulated, and new demand must be cultivated. When it comes to creating new demand, the possibilities are vast.
In Wuhan, Central China’s Hubei Province, the Yellow Crane Tower scenic area launched the glowing-in-the-dark refrigerator magnets called “crane dance in lights.” Blending cultural heritage with modern creativity, the product has racked up sales of more than 10 million yuan, making it a hit souvenir among tourists.
In Zhengzhou, Central China’s Henan Province, the “Everything-Connected Sky Supermarket” uses drones to deliver goods, with some orders reaching helipads in as little as five minutes – offering consumers a novel and convenient shopping experience.
Meanwhile, desk ornaments and phone cases featuring phrases like “No worries, it’s all good” have gone viral online. Among the “top 10 products of 2024” listed by e-commerce platforms, more than half were linked to providing consumers with emotional value.
Clearly, understanding consumer psychology and understanding their preferences are key to creating new demand and driving spending. In the end, it comes down to one word: innovation.
From the large-scale equipment upgrades and trade-in of consumer goods to “dual subsidies,” these policies are genuine, and the subsidies involve real money. With China’s vast market capacity, enterprises must seize these policy dividends while also putting forward effective innovations. With both the government and the market working in tandem, there is every reason to believe that efforts to boost consumption will bear fruit.
