It's about boosting consumption through finance! Six departments have introduced 19 measures: Increased support in three key areas

Recently, six departments including the People's Bank of China jointly issued the Guiding Opinions on Financial Support for Boosting and Expanding Consumption (hereinafter referred to as the "Opinions").

The Opinions point out that it is necessary to strengthen the incentives of structural monetary policy tools, increase credit support for key areas of service consumption, and develop diversified financing channels such as bonds and equity. In addition, the Opinions emphasize the need to focus on key areas of consumption and increase financial support, and innovate financial products in line with consumption scenarios and characteristics.

Several industry insiders told a Caixin reporter that the Opinions propose 19 key measures from six aspects, including supporting the enhancement of consumption capacity, expanding the financial supply in the consumption sector, tapping and releasing the consumption potential of residents, promoting the improvement of consumption supply efficiency, optimizing the consumption environment, and ensuring policy support, to provide strong financial support for better leveraging the fundamental role of consumption in economic development.

Support high-quality enterprises in the consumption industry chain to raise funds through issuance and listing, or listing on the "New Third Board."

In terms of increasing the channels and methods of consumer finance supply, the Opinions state that it is necessary to support eligible enterprises in the service consumption sectors such as culture, tourism, and education to issue bonds, and encourage eligible science and technology innovation enterprises to raise funds through the bond market. Support should be provided to increase equity investment in seed-stage and start-up enterprises, and to support high-quality enterprises in the consumption industry chain to raise funds through issuance and listing, or listing on the "New Third Board."

The Opinions also clarify three important directions for financial efforts, including supporting the enhancement of residents' consumption capacity, supporting the improvement of consumption supply efficiency, and strengthening basic financial services.

"Currently, China's consumption infrastructure landscape is not perfect enough, the county-level logistics and distribution system is relatively lagging, and the supply chain response efficiency needs to be improved, which to some extent restricts the expansion and quality improvement of the consumer market," industry insiders analyzed to a Caixin reporter.

The Opinions emphasize the need to explore and innovate financial products and financing models that adapt to the characteristics of capital demand in the construction of consumption infrastructure such as elderly-friendly renovations, sports facilities, and charging equipment, as well as in commercial circulation projects such as transportation, logistics, and supply chains. It is necessary to reasonably set loan terms, increase loan disbursements, and promote the improvement of consumption supply efficiency. Support should be provided for eligible consumption infrastructure to issue real estate investment trust funds in the infrastructure sector.

"Investment in supporting facilities for various consumption infrastructures will be increased, especially in combination with urban renewal projects and existing commercial real estate projects, which will all receive greater financial support." Regarding the above policies, Yan Yuejin, Deputy Dean of the E-House China R&D Institute, said that the Opinions also clearly support eligible consumption infrastructure to issue real estate investment trust funds in the infrastructure sector. The impact on cultural tourism real estate and commercial real estate is the most direct, benefiting the subsequent expansion of financing for cultural tourism enterprises and commercial real estate enterprises.

Innovate financing models in areas such as residential services and develop financial products and services tailored to the characteristics of new-type consumption.

The "Opinions" clarify the key areas for financial support in consumption: commodity consumption, service consumption, and new-type consumption.

In response, industry insiders analyzed to Caixin reporters that the Central Government's "Special Action Plan to Boost Consumption" focuses on key areas such as commodity consumption, service consumption, and new-type consumption, precisely targeting to activate the potential of the consumer market. Currently, commodity consumption is relatively robust. Driven by the trade-in policy, durable goods consumption has reached a considerably high level, with commodity consumption expenditure accounting for a similar proportion of GDP as the US in 2024.

Additionally, there is relatively greater room for growth in service consumption. In 2024, service consumption by Chinese residents accounted for 18% of GDP, while in developed countries, it generally exceeds 40%, reflecting the enormous potential of China's service consumption market. Furthermore, with the continuous growth of residents' per capita disposable income, the demand for new-type consumption is becoming increasingly strong.

Specifically, in terms of prioritizing support for the development of service consumption, the "Opinions" point out the need to increase financing support for business entities in sectors such as wholesale and retail, catering and accommodation, housekeeping services, elderly care and childcare, to help tap the potential of basic service consumption. Innovate financing models in areas such as cultural tourism, sports, entertainment, education and training, and residential services to stimulate the vitality of improved service consumption.

In Yan Yuejin's view, the mention of "service consumption" has significantly increased, representing a new and important driving force for boosting consumption. Among them, residential services include but are not limited to housing rental services, property management services, home decoration and repair services, community convenience services, as well as related services surrounding the improvement and upgrading of the living environment.

"Financial policies encourage innovation in financing models in the residential sector to stimulate the vitality of improved service consumption," Yan Yuejin said. From the perspective of the areas involved this time, the subsequent rental market, property management market, and decoration market will face greater opportunities. For example, with the overall recovery of the second-hand housing market, the decoration demand related to second-hand housing communities will be further released, which will contribute to the further activation of the decoration and decoration loan businesses.

Additionally, in terms of fostering new-type consumption, the "Opinions" emphasize the need to explore effective channels and methods for financial support in new-type consumption such as digital consumption, green consumption, and health consumption, strengthen financial innovation, and develop financial products and services tailored to the characteristics of new-type consumption.