On August 12, the Ministry of Finance (MOF) outlined the details of the newly issued Implementation Plan for the Loan Discount Policy for Service Industry Operators (Caijin [2025] No. 81). This initiative, jointly released by nine ministries and agencies, reflects Beijing’s broader strategy to expand domestic demand, reduce financing costs, and strengthen the role of the service sector as a driver of consumption-led growth.
Policy Context
The loan discount policy is one of two key fiscal measures introduced this year to stimulate consumption, alongside the discount scheme for personal consumption loans. It builds on the 2024 Central Economic Work Conference and the 2025 Government Work Report, both of which highlighted the importance of boosting domestic demand and consumption. The policy was approved at the 65th Executive Meeting of the State Council in July and is embedded within the Special Action Plan for Boosting Consumption.
Policy Objectives
The Plan is designed to address three critical dynamics in China’s economy:
- Consumption-driven growth: With service consumption now accounting for 46.1% of per capita expenditure, demand has shifted from goods to services. Targeted support aims to improve supply capacity and match consumer expectations for higher-quality services.
- Livelihood and well-being: Service sectors such as healthcare, childcare, culture, tourism, and sports are directly linked to improving quality of life. Expanding service offerings aligns with the government’s emphasis on people-centered development.
- SME financing challenges: The majority of service industry operators are small and medium-sized enterprises (SMEs) or individual businesses, often constrained by high borrowing costs. By lowering financing costs, the policy seeks to unlock investment in service provision and reduce structural bottlenecks in the consumer economy.
Key Features of the Policy
The loan discount scheme provides direct fiscal support through a one-percentage-point annual interest discount for eligible loans, capped at RMB 10,000 per entity for a period of up to one year. Loans must be contracted between March 16 and December 31, 2025, and used exclusively to improve consumption infrastructure and enhance service supply.
Eligible sectors include catering, accommodation, healthcare, elderly and childcare services, housekeeping, culture and entertainment, tourism, and sports. Twenty-one national banks—including the major state-owned commercial banks and joint-stock banks—are designated as handling institutions.
Governance and Implementation
The Plan emphasizes a balance between government guidance and market-based operations. Banks retain responsibility for loan review and risk control, while provincial governments and financial regulators are tasked with oversight, audit, and compliance. The system is designed to streamline processes, minimize administrative burdens for business entities, and ensure that funds are channeled into productive uses.
The workflow follows a six-step cycle: loan approval and issuance, monthly review, application for discount funds, settlement between banks and provincial finance departments, fund allocation to enterprises, and final liquidation. Strict monitoring provisions are included to prevent misallocation, arbitrage, or diversion of funds into non-compliant activities such as real estate or financial speculation.
Strategic Implications
The loan discount policy signals Beijing’s determination to support service-sector operators as the backbone of domestic consumption. It reflects a structural shift in China’s growth model, from investment and manufacturing-led expansion to consumption and services-driven development. By lowering financing costs, the government is seeking to stimulate both supply and demand, thereby reinforcing the resilience of the consumer economy.
At the same time, the emphasis on strict supervision, coordination across multiple agencies, and provincial-level responsibility underscores the government’s concern with ensuring fiscal prudence and risk management. This approach highlights Beijing’s intent to provide “real money” support while safeguarding financial stability.
Conclusion
The Loan Discount Policy for Service Industry Operators represents a targeted fiscal tool aimed at strengthening SMEs, upgrading service provision, and sustaining domestic demand. Its success will depend not only on effective implementation by local governments and financial institutions, but also on the capacity of service industry operators to leverage reduced financing costs into improved service offerings.
For businesses, the policy offers an opportunity to expand operations, enhance competitiveness, and capture emerging demand in China’s evolving consumption landscape.