Study Times: Giving Financial "Wings" to Boost Consumption

The “14th Five-Year Plan” proposal emphasizes “Vigorously boosting consumption. Deeply implementing special actions to stimulate consumption. Coordinating efforts to promote employment, increase income, and stabilize expectations, reasonably increasing the proportion of public service expenditure in fiscal spending, and enhancing residents’ consumption capacity.” China has a population of over 1.4 billion, making it one of the world’s largest and most potential consumer markets. However, the resident consumption rate is relatively low, and insufficient consumer spending has become a significant factor restricting the sustained expansion of domestic demand. By December 2025, the General Office of the Ministry of Commerce, the General Office of the People’s Bank of China, and the General Office of the Financial Regulatory Authority issued the “Notice on Strengthening Business and Financial Coordination to Further Boost Consumption.” It is necessary to further leverage the important role of financial services in driving consumption growth and promoting consumption transformation and upgrading, strengthening financial support from both the supply and demand sides of consumption, and helping to unleash the potential for consumption growth.

Financial can assist consumption in multiple ways. First, financial services can promote economic growth, thereby increasing residents’ income levels. Consumption is a function of income; generally, the higher the income level, the stronger the consumption capacity. Countercyclical and cross-cycle monetary policy adjustments can support the real economy and promote employment and income growth for residents, thereby increasing consumption demand. Financial products suitable for household wealth management can also increase residents’ financial assets and property income, solidifying the foundation for consumption. Second, financial services can alleviate residents’ short-term liquidity constraints. Short-term liquidity constraints are a key current barrier to consumption. For some households facing debt issues and poor asset liquidity, financial services such as consumer credit can ease temporary liquidity constraints, increase available assets for consumption, meet residents’ immediate consumption needs, and convert current income into consumption. Third, financial services can improve the consumption situation of the aging population. China’s overall consumption rate is relatively low, which is directly related to the consumer psychology of “saving more, consuming less” among the elderly and the deepening aging population. Financial services can promote investment and financing in the elderly care industry through credit, insurance, wealth management, and other financial products, as well as inclusive pension special re-lending policies, innovate age-friendly services, meet diverse elderly care needs, and cultivate new growth points for consumption by addressing urgent, difficult, and immediate issues faced by seniors. Finally, financial services can increase the supply of high-quality consumption. By strengthening financial support for key consumption sectors, increasing credit issuance for infrastructure projects such as cultural, tourism, sports facilities, and entertainment venues, reinforcing credit support for small and micro enterprises in wholesale, retail, catering, and accommodation sectors, improving consumption infrastructure, enhancing service quality, and diversifying consumption supply, ultimately improving the efficiency of consumption supply.

To leverage financial power to boost and expand residents’ consumption, it is necessary to organically combine the deep implementation of special actions to stimulate consumption with the deepening of supply-side structural reforms in finance, focusing on releasing consumption potential, stimulating consumption vitality, and enhancing residents’ willingness to consume, better meeting the financial service needs in the consumption field.

Leverage the total and structural role of finance to enhance residents’ consumption potential. Insist on prioritizing financial support for stabilizing employment, utilizing various monetary policy tools such as re-lending and re-discounting, strengthening financial services for private and small micro enterprises, individual businesses, and other employment-absorbing entities, and promoting multi-channel employment and entrepreneurship. Coordinate the implementation of urban and rural residents’ income-increasing plans, increase income through multiple channels, and promote the simultaneous growth of operational income, property income, and wage income, laying a solid foundation for consumption.

Strengthen targeted financial promotion of consumption to stimulate vitality. Develop differentiated plans for residents with different income sources, age groups, and risk resistance, providing targeted and differentiated credit products. Focus on the needs of middle-income groups, offering personalized, precise, and customized financial services to increase their marginal propensity to consume and fully leverage the role of middle-income groups as main drivers of consumption growth. Appropriately relax credit thresholds for consumption loans, providing targeted financial products and services for residents with lower assets, alleviating the strong credit constraints faced by low-income families and micro entrepreneurs with insufficient assets. Innovate in consumer credit, developing new financial products tailored to emerging consumption scenarios such as sports events, performances, and folk culture. Additionally, increase financial support for the supply side of consumption, encouraging financial institutions to proactively connect with credit projects in the consumption sector, strengthening credit support for the renovation of commercial facilities and the construction of trade circulation systems, providing full industry chain and lifecycle financial services for high-quality projects, increasing high-quality consumption supply, and stimulating residents’ consumption vitality.

Expand the coverage of financial services for consumption and enhance the willingness of various groups to consume. Continuously improve the accessibility and convenience of financial services to meet the financial needs of new graduates, individual businesses, blue-collar and white-collar workers across industries, and other new citizens. Deeply explore financial needs suitable for the elderly, grasp the changing trends in their consumption psychology and behavior, reasonably design financial products and services suitable for seniors, expand new aging-friendly consumption scenarios, and improve the consumption level of the elderly. Continue to deepen agricultural financial services, strengthen the coupling with rural consumption preferences, and channel more consumer credit products into rural areas to boost rural consumption levels. Strengthen financial literacy education, encourage consumers to reasonably utilize credit tools under financial security, and improve or smooth consumption levels, thereby increasing residents’ willingness to consume.

Deepen innovation in the supply side of consumer finance to better meet the financial service needs in the consumption sector. Supply-side innovation is key to adapting to consumption. Leverage the broad coverage and high convenience of digital finance, rely on artificial intelligence and big data algorithms to explore the role of user consumption and behavior data, achieve precise and inclusive consumer financial services. Strengthen the innovation capacity of financial institutions in “scenarios and technology,” build a multi-level, multi-scenario, multi-group consumer financial service system, dynamically generate customized financial service plans, and meet the diverse and flexible needs of consumers for financial products. Rely on big data, cloud computing, and other technologies to improve fast and accurate risk management models for financial institutions, provide differentiated products, interest rates, and repayment cycles based on consumption scenarios, enhance pricing and risk control capabilities, and improve the quality and efficiency of financial services for consumption.

(Source: Learning Times)