By Special Correspondent

China will establish a 100-billion-yuan special fund in 2026 to better coordinate fiscal and financial policies aimed at boosting domestic demand, according to the draft central and local budgets submitted to the national legislature.

The report states that the special fund will support a package of coordinated fiscal and financial policies designed to expand consumption and stimulate private investment.

The fund will be used to lower enterprise financing costs, increase consumer spending power and expand the supply of high-quality services.

Authorities will refine interest subsidy policies for personal consumer loans and loans extended to service-sector businesses. These policies will be expanded in coverage, extended in duration and provided with higher ceilings for interest subsidies.

Interest subsidy policies will also be implemented for loans extended to micro, small and medium-sized enterprises (MSMEs).

The report notes that the government will introduce a special guarantee scheme to support private investment and establish risk-sharing mechanisms for private enterprise debt financing.

Policies to provide interest subsidies for equipment upgrade loans will also be improved to make financing more accessible and affordable for enterprises.

The fund will operate through a combination of policy tools, including loan interest subsidies, financing guarantees and risk compensation mechanisms.

Through these measures, authorities aim to encourage the participation of banks, guarantee institutions and enterprises in expanding financing support.

The report states that fiscal and financial resources will be coordinated so that they work together to provide greater support for private investment and consumer spending.

The government will also implement additional measures to increase consumer spending.

Special initiatives will be advanced to stimulate consumption and expand domestic demand.

To boost spending power, authorities will promote income growth through multiple channels and improve income distribution through taxation, social security and transfer payment policies.

To stimulate goods consumption, ultra-long special treasury bonds totaling 250 billion yuan will be issued to support consumer goods trade-in programs.

These programs will continue to support the replacement of automobiles and home appliances and encourage purchases of digital and smart products.

Authorities will also implement initiatives aimed at upgrading service consumption and supporting new forms and models of consumer spending.

The report states that trials of receipt lotteries will be carried out in selected cities to stimulate spending in sectors including retail, catering, hospitality, culture, entertainment and tourism.

In addition, policies will be introduced to promote inbound consumption, including the expansion of duty-free stores in eligible port cities and support for more retail outlets to become tax refund stores.

Credit: INP-WealthPk