An official from the Ministry of Finance answers questions from reporters on the implementation of the fiscal interest subsidy policy for equipment‑upgrade loans.

To implement the decisions and arrangements of the CPC Central Committee and the State Council, and in accordance with the requirements set forth in the State Council’s Notice on Issuing the Action Plan for Promoting Large-Scale Equipment Upgrading and the Trade-In of Consumer Goods (Guofa [2024] No. 7), the Ministry of Finance, jointly with the National Development and Reform Commission, the People’s Bank of China, and the National Administration of Financial Regulation, has issued the Notice on Implementing the Fiscal Interest Subsidy Policy for Equipment-Upgrading Loans (Caijin [2024] No. 54, hereinafter referred to as the “Notice”). Recently, a responsible official from the Ministry of Finance answered questions from reporters regarding issues related to the Notice.

   I. What is the main background behind the issuance of the “Notice”?

   Answer: Promoting large-scale equipment upgrades and the trade-in of consumer goods for new ones is a major strategic decision made by the CPC Central Committee and the State Council in light of China’s overarching goal of high-quality development. This initiative will robustly boost both investment and consumption, delivering benefits in the short term as well as over the long haul. On February 23, 2024, General Secretary Xi Jinping presided over the fourth meeting of the Central Financial and Economic Affairs Commission, which focused on this issue, emphasizing that “accelerating product renewal and replacement is an important measure for advancing high-quality development, and we must encourage and guide a new round of large-scale equipment upgrades and consumer‑goods trade-ins.” On March 1, Premier Li Qiang chaired an executive meeting of the State Council to deliberate on the matter; following the meeting, the “Action Plan for Promoting Large-Scale Equipment Upgrades and Consumer‑Goods Trade-Ins” (Document No. 7 [2024] of the State Council) was issued. In accordance with the decisions and arrangements of the CPC Central Committee, the Ministry of Finance promptly convened a special meeting of its leadership to study specific implementation measures. Drawing on lessons learned from previous fiscal interest‑subsidy policies and based on field investigations, the Ministry formulated a fiscal interest‑subsidy policy for equipment‑upgrade loans, concentrating resources on supporting equipment modernization and technological transformation. After repeated deliberations, extensive consultations, and due approval procedures, the Ministry, in coordination with relevant authorities, issued the corresponding Notice.

   II. What is the primary significance of the issuance of the “Notice”?

   Answer: Fiscal interest subsidies provide operating entities with tangible financial support, representing a proactive fiscal policy that benefits both businesses and the public. Earlier fiscal subsidy measures have yielded positive results and have been widely recognized and welcomed by market participants. In line with the requirements set forth in Document No. 7 of the State Council [2024], the introduction of a fiscal interest subsidy policy for equipment‑upgrade loans is of significant importance. First, it helps integrate the strategy of expanding domestic demand with the deepening of supply‑side structural reform, fostering coordinated efforts across central and local authorities and among relevant departments, guiding financial resources toward priority sectors and weak links, and enhancing the quality and efficiency of the national economic circulation. Second, it enables synergistic implementation of fiscal, financial, and industrial policies, amplifying their incentive and guidance effects, attracting private capital, and ensuring the effective transmission of macro policies to micro‑economic actors, thereby forging a unified force and achieving resonance between government and market. Third, it accelerates the development of new‑type productive forces by using standards related to technology, energy consumption, and emissions as guiding benchmarks, encouraging enterprises to phase out outdated products and equipment, prioritizing advanced production capacity, promoting the transformation and upgrading of traditional industries, and creating favorable market conditions for cultivating these new productive forces.

   III. Could you please tell us what the main contents of the “Notice” are?

   Answer: The Notice comprises five sections: policy provisions, loan procedures, interest-subsidy procedures, supervision and management, and other matters. The main contents are as follows: First, the scope of support—eligible entities are those included in the relevant departments’ list of candidate projects and meet the eligibility criteria for equipment‑upgrade‑related reloans. The list of candidate projects is jointly determined through consultation among the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Transport, the Ministry of Agriculture and Rural Affairs, and other competent authorities. Second, the interest‑subsidy standard: the central government provides an interest subsidy of 1 percentage point on the principal of eligible loans, with the subsidy period not exceeding two years. Third, the term conditions: loans that satisfy the eligibility requirements and are disbursed between the date of issuance of Document No. 7 [2024] of the State Council (March 7, 2024) and December 31, 2024, may, depending on the utilization of the corresponding reloan quota for equipment upgrades, be extended on a case‑by‑case basis. Fourth, fund management: a “dual pre‑allocation” mechanism is implemented, under which the Ministry of Finance pre‑allocates interest‑subsidy funds to provincial finance departments, and the provincial finance departments, on a quarterly basis, further pre‑allocate such funds to the executing banks. Fifth, fund review: local finance departments, development and reform authorities, industry regulators, and branches of the People’s Bank of China shall coordinate and collaborate, promptly sharing information on fiscal interest subsidies, project lists, reloan lists, and other relevant data.

   IV. Taking the issuance of this “Notice” as an example, what efforts did the Ministry of Finance undertake during the policy‑making process?

   Answer: In accordance with the decisions and arrangements of the CPC Central Committee and the State Council, the Ministry of Finance conducted thorough field research and repeated deliberations, further streamlining the interest-subsidy procedures, refining the subsidy standards, and enhancing policy effectiveness. The following specific measures were undertaken: First, on-site investigations. From March to April, teams visited multiple localities to conduct in-depth field surveys, carefully soliciting feedback from local authorities and business entities on the implementation of the previous fiscal interest-subsidy policies, and drafting an initial version of the policy document. Second, soliciting opinions. In mid-April, written consultations were held with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Transport, the Ministry of Agriculture and Rural Affairs, the People’s Bank of China, the National Audit Office, the China Banking and Insurance Regulatory Commission, as well as local finance departments (bureaus) and the Ministry of Finance’s regional supervisory offices. Based on ongoing communication and full consideration of relevant stakeholders’ views, the policy document was further refined. Third, conducting policy evaluations. In mid-May, in compliance with regulations, the fiscal interest-subsidy policy underwent a legality review, an assessment of its issuance, and an evaluation of its consistency with broader macroeconomic policy orientations. Fourth, submitting the policy for State Council approval. In early June, the State Council approved the implementation of the fiscal interest-subsidy policy for equipment‑upgrade loans. Fifth, promptly issuing the policy document. On June 25, the “Notice” was officially promulgated.

   V. In the concrete implementation of the Notice, how can we ensure coordinated collaboration to effectively carry out the measures, boost the enthusiasm of market entities, enhance the quality and efficiency of fiscal fund utilization, and improve the effectiveness of the interest-subsidy policy?

   Answer: To ensure the effective implementation of the fiscal interest-subsidy policy and achieve early results, we have maintained coordinated efforts between the central and local governments, strengthened the synergy among fiscal, monetary, and industrial policies, and leveraged the catalytic role of fiscal funds to maximize impact with minimal resources. By forging policy alignment with local governments, financial regulators, and sectoral authorities, we have coordinated and concerted our efforts across the following areas to enhance the quality and effectiveness of the policy.

  First, we will strengthen coordination and synergy to pool resources and create a unified effort. Large-scale equipment upgrades touch on every aspect of economic and social development, posing heavy tasks and high standards. In implementing relevant policies, we must both fully leverage the market’s decisive role in resource allocation—encouraging enterprises to apply voluntarily and allowing banks to conduct independent credit reviews—and enhance the government’s role. The finance authorities, the departments responsible for development and reform as well as industry regulation, and the People’s Bank of China will promptly share information—including fiscal interest subsidies, lists of eligible enterprises and project inventories, and re-lending schedules—to jointly support financial institutions in expanding related lending.

  Second, two advance disbursements have been implemented to boost the enthusiasm of market entities. To further enhance their sense of gain, the fiscal interest-subsidy funds operate under a “two‑stage advance‑disbursement” mechanism: the Ministry of Finance issues budget allocations in advance to provincial finance departments, thereby pre‑allocating the subsidy funds; in turn, the provincial finance departments, through 21 commercial banks, implement the subsidy policy by regularly advancing subsidy funds to their provincial branches, with final settlement based on actual loan disbursements. Upon receiving these subsidy funds from the finance authorities, the 21 commercial banks deduct the advanced portion when collecting interest from market entities, effectively reducing financing costs and further bolstering their confidence and motivation to upgrade equipment and undertake technological upgrades.

  Third, clarifying interest-subsidy requirements will enhance the quality and efficiency of fiscal fund utilization. In the past, during the implementation of interest-subsidy policies, a small portion of preferential credit funds remained idle in the accounts of business entities, failing to be promptly transferred to supplier accounts, thereby undermining the policy’s effectiveness. This time, the central government has refined the interest-subsidy criteria, stipulating that subsidies will be granted only from the date the relevant loan funds are disbursed to supplier accounts, while no subsidies will be provided for any funds that remain unutilized. This measure better encourages business entities to make timely payments, accelerates capital turnover, speeds up economic circulation, and strengthens both investment and consumption.

  Fourth, we will take proactive responsibility and ensure the thorough and meticulous implementation of the interest-subsidy policy. The fiscal authorities will fulfill their duties by working closely with the development and reform, industry regulatory, and financial management departments to strengthen publicity and interpretation of relevant policies, helping market entities better understand the subsidy framework and application procedures. Meanwhile, the 21 commercial banks, as key implementers of the policy, have demonstrated strong initiative, extended their services to the grassroots level, and rigorously put in place all support measures. They have also proactively engaged with market entities, effectively addressing their legitimate financing needs.

  Fifth, we will ensure that all parties assume their respective responsibilities to deliver targeted and effective support. Relevant departments shall, in accordance with their assigned duties, strengthen review and oversight and implement end-to-end tracking and management. Provincial and prefectural‑level fiscal authorities will take the lead in organizing the review of interest‑subsidy applications, while the 21 implementing banks must fulfill their “three‑checks” obligations for loan disbursement. Development and reform, industry‑regulating, and financial supervisory authorities at all levels should actively support the work of local fiscal departments and duly discharge their related oversight and regulatory responsibilities.

[Editor-in-charge: Wang Jianing]

Source: Ministry of Finance Website