According to S&P Global Ratings, the Chinese government is easing its direct influence over bank lending and instead relying more on market-based measures to guide financing toward policy-backed sectors.
S&P analyst Yutong Zou said the shift suggests China is reducing distortions in how banks price risk, which could help ease pressure on profitability and provide better support for credit growth.
Zou added that Beijing’s latest fiscal package marks a move toward market-oriented funding channels for priority sectors, replacing its earlier heavier reliance on administrative guidance.
As part of this approach, the government has introduced a RMB100 billion special fiscal fund to finance six policy tools, including four loan interest subsidy programs aimed at boosting personal consumption, the service industry, small and medium-sized enterprises, and equipment upgrades.
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