The improvement in the credit structure is playing a vital role in facilitating the transformation of the economy, as indicated by central bank data released on Wednesday.
In April, inclusive loans to micro and small businesses, and medium- and long-term loans in the manufacturing industry increased by 11.9 percent and 8.5 percent year on year, respectively, both higher than the average growth rate of various loans in the same period.
Data shows that the allocation of new credit has changed significantly, with an improved existing credit structure.
In terms of businesses and households, since the beginning of 2021, the share of corporate loans has risen from about 63 percent to around 68 percent, while the share of household loans has fallen from about 37 percent to about 32 percent.
This shift shows that more credit is being directed towards real enterprises, and the decline in household financing demand is connected to more rational approach to home buying and investments.
In terms of enterprises, since the beginning of 2021, the share of loans to small and micro enterprises has increased from about 31 percent to around 38 percent, while the share of loans to large and medium-sized enterprises has decreased from approximately 69 percent to about 62 percent.
"This is partly due to the significant impact of inclusive loans to micro and small businesses, which have effectively supported businesses and benefited the public. Additionally, the development of direct financing, such as bonds, in recent years, and the growing diversification of financing options for large enterprises also contribute to this. The continued deepening of financial market development has also improved the financing match for different types of businesses," said Dong Ximiao, chief researcher of the Merchants Union Consumer Finance Co., Ltd.
Additionally, by industry, since the beginning of 2021, the share of manufacturing in total medium- and long-term loans has increased from 5.1 percent to around 9.3 percent. The share for consumer-related industries has risen from 9.6 percent to about 11.2 percent, while the share for traditional real estate and construction has decreased from 15.9 percent to around 13 percent.
Financial institutions are increasingly directing credit resources towards the manufacturing and technology innovation sectors, while also enhancing financial support for key service industries like accommodation, dining, cultural and recreational activities, and education and training. As a result, the share of loans to these sectors has significantly increased.
Improving credit structure facilitates transformation of Chinese economy
China will strengthen fiscal and financial coordination to amplify policy effectiveness, experts said as the draft central and local budgets for 2026 were unveiled on Friday at the ongoing fourth session of the 14th National People's Congress.
According to the draft central and local budgets for 2026, 1.3 trillion yuan (190 billion U.S. dollars) of ultra-long special treasury bonds will be issued to provide continued support for the implementation of major national strategies and security capacity-building in key areas and for large-scale equipment upgrades and consumer goods trade-in programs.
Ultra-long special treasury bonds totaling 800 billion yuan will be allocated to support the implementation of major national strategies and security capacity-building in key areas, and 250 billion yuan in ultra-long special treasury bonds will be earmarked for consumer goods trade-in programs.
The country will refine these programs in terms of their scope and subsidy standards, and continue to support the scrapping and replacement of automobiles, home appliance trade-in schemes, and purchases of new digital and smart products.
China will also set up a 100-billion-yuan fiscal-financial coordination fund to boost domestic demand. The fund will support consumption and private investment through loan interest subsidies, financing guarantee, and risk compensation.
"Fiscal and monetary policies are the two major macroeconomic tools for macro-control, and their coordination is crucial. For instance, fiscal funds primarily serve as a guiding role, while financial institutions provide the capital. When fiscal guidance and financial resources are combined, the synergistic effect creates a result greater than the sum of its parts," said Yang Zhiyong, director of the Chinese Academy of Fiscal Sciences.
"By leveraging interest subsidies, we can mobilize substantial credit from financial institutions, thereby naturally stimulating consumption. The Ministry of Finance, in collaboration with the People's Bank of China, has introduced highly innovative measures, such as providing guarantees for the issuance of corporate bonds by small and medium-sized enterprises (SMEs), and compensating investors for losses. I believe the leveraging effect, making minimal efforts for maximum results, will become even more potent," said Yao Dongmin, director of the Center for China Fiscal Development under the Central University of Finance and Economics.
China's top legislature opened its annual session on Thursday morning at the Great Hall of the People in Beijing, with Chinese President Xi Jinping and other Party and state leaders attending the opening meeting alongside more than 2,700 NPC deputies. This year's NPC session is scheduled to run till March 12.
China to strengthen fiscal, financial coordination to amplify policy effectiveness: experts
