Bloomberg reported on Monday that Chinese banks are offering a wide range of preferential interest rates and incentives as the government seeks a pickup in consumer spending, which is part of an effort to strengthen the foundation of the world’s second largest economy.
Bank of China (BOC) and China Construction Bank, among others, are using e-commerce platforms to entice consumers to take out retail loans by providing promotional interest rates and other incentives, such as gift cards.
Some of these examples were highlighted by Bloomberg, including a consumer loan product from the BOC in Jiangsu that has an annualized rate as low as 3.6% till the end of March. After previously offering rates as high as 4.35%, China Guangfa Bank is now offering rates as low as 3.65% on retail loans. A benchmark for lending rates, China’s one-year loan prime rate was 3.65% in January.
China Merchants Bank, the country’s retail banking king, offered 34% discount vouchers on a consumer loan during a campaign that ended on January 31.
A departure from the strict Covid Zero policy, which had battered businesses and brought economic growth down to the second weakest pace since the 1970s, has prompted banks to increase loan supply early in the year.
Last week, Chinese President Xi Jinping urged a rise in consumer spending to achieve sustainable economic growth.
The Chinese government has stated that they will prioritize economic growth this year, placing strong focus on strengthening consumption and investment, suggesting that further fiscal and monetary stimulus may be on the horizon.
