China's loan interest subsidy plans targeting personal consumption and service-sector businesses will effectively promote consumption and expand domestic demand, according to experts from the country's leading financial services institutions.
China's Ministry of Finance said on Tuesday that eight categories of eligible service sector businesses will benefit from a new loan interest subsidy policy action plan.
The action plan targets service sector businesses in the categories of catering and accommodation, health care, elderly care, childcare, housekeeping, culture and entertainment, tourism and sports.
China will also provide interest subsidies for qualifying personal consumption loans. Individuals may receive interest subsidies on portions of personal consumption loans issued by lending institutions, according to the ministry.
"The loan interest subsidies for consumption in key sectors provide real financial support to residents' consumption. The policies will help expand domestic demand and smooth the internal circulation of the economy," said Wang Yifeng, deputy director of Research Institute at Everbright Securities.
"The policy will be implemented through the approach of subsidy first, loan later. The annual subsidy rate of 1 percentage point is roughly one-third of the current commercial bank personal loan interest rate. With the subsidy, qualified individuals can get the loans with the interest rate below 3 percent. That's equivalent to a 30 percent discount on the loan interest rate, which will significantly reduce people's loan costs, enhance the stability of consumer credit demand and effectively alleviate the burden on residents," Wang said.
Coordinating with other policies such as the consumer goods trade-in programs, the subsidies will effectively boost China's domestic circulation by stimulating the domestic consumption, experts said.
"The current monetary policies and fiscal policies have formed a superimposed effect, giving full play to the policy effect. That will forcefully and effectively promote consumption, stabilize employment and expand domestic demand," said Dong Ximiao, principal investigator of Merchants Union Consumer Finance Company.
China's loan interest subsidy to effectively stimulate domestic consumption: experts
Geoeconomic confrontation is the leading short-term global threat in 2026, the World Economic Forum (WEF) warned in its Global Risks Report 2026 released on Wednesday ahead of its annual meeting in Davos, Switzerland.
The report ranks geoeconomic confrontation as the top risk for 2026, followed by interstate conflict, extreme weather, societal polarization, and misinformation and disinformation. It also identifies geoeconomic confrontation as the most severe risk over the next two years.
"I think if there is to be one key takeaway from the report, it's that we are entering an age of competition and this new competitive order is then shaping current global risks, but it is also shaping and to some extent hindering our ability to actually cope with them. That's really the key takeaway. If we take a look at, the number one risk both for 2026 and two years out, it's dual economic confrontation. But then if we look at the risks 10 years out. It's really the climate and environment related risks. All of these things require global cooperation and that's where we're seeing a big backsliding in this new age of competition," said Saadia Zahidi, managing director of the WEF.
Economic risks showed the largest increase in the two-year outlook, with concerns over economic downturns, inflation, rising debt and potential asset bubbles intensifying amid geoeconomic tensions, the report said.
Environmental risks remain the most severe overall, led by extreme weather, biodiversity loss and critical changes to Earth systems. The report noted that three-quarters of respondents expect a turbulent environmental outlook.
Risks related to adverse outcomes of artificial intelligence rose sharply, climbing from 30th in the two-year horizon to fifth in the 10-year outlook, reflecting concerns over impacts on labor markets, society and security.
The 21st edition of the report draws on views from more than 1,300 experts, policymakers and industry leaders.
The WEF's annual meeting will be held in Davos from Jan 19 to 23 and draw nearly 3,000 guests from more than 130 countries and regions to participate.
"So overall, we are starting to see this shift away from what have traditionally been the ways in which people have been able to cooperate. Now, that is not to say that any of this is a foregone conclusion. And I think that's a really important message around the risks report. None of this is set in stone. All of this is in the hands of leaders. Whether they choose to cooperate and invest in resilience or whether they do not. So that's really what we'll be focused on next week in Davos bringing leaders together under this overall theme of 'a spirit of dialogue' and trying to reestablish relationships, cooperation and trust. That's the fundamental," said Zahidi.
WEF warns of rising geoeconomic risks in 2026
