China’s central bank announced a package of financing measures on Tuesday aimed at lowering borrowing costs for priority sectors and easing costs for some first-time homebuyers. The steps come as policymakers seek to stabilize economic activity after signs of weakening growth, investment and consumer demand.
The People’s Bank of China said it would reduce the pledged supplementary lending rate by 25 basis points, cutting the one-year PSL rate to 1.5% from 1.75%. The facility will also be widened to fund projects in water systems, power grids, computing, communications, urban pipelines and logistics networks.
The central bank said the changes are intended to encourage policy banks to increase lending to areas tied to national development priorities and the real economy. It said broader access to PSL funding should help expand investment and support domestic demand.
China is targeting economic growth of 4.5% to 5% in 2026, but recent indicators have pointed to softer momentum. Growth slowed to 4.3% in the second quarter, while industrial production, retail sales and fixed-asset investment weakened at the start of the third quarter. The property market has also remained under prolonged pressure.
The announcement followed a cabinet pledge a day earlier to strengthen counter-cyclical policy support as economic strains increased.
Alongside the PSL rate cut, the central bank raised several relending quotas. The quota for sci-tech innovation and technological upgrading was increased by 200 billion yuan, or $29.84 billion, to 1.4 trillion yuan. The relending quota for agriculture and small businesses was lifted by 500 billion yuan to 4.85 trillion yuan.
A separate relending quota for private companies was also expanded by 300 billion yuan, bringing it to 1.3 trillion yuan. The central bank said these adjustments are intended to encourage banks to provide more credit to small and medium-sized technology firms, support equipment upgrades in key sectors and maintain a stable financial environment.
Housing support was also expanded. The central bank and financial regulator said China will start offering interest subsidies on new commercial mortgages for eligible first-time homebuyers nationwide from October 1.
Qualified borrowers will receive an annual subsidy equal to 1 percentage point of interest for as long as five years. The subsidy will apply to mortgage amounts of up to 1 million yuan per household.
Eligibility is limited to homes with floor space of no more than 120 square meters and purchase prices not exceeding 1.5 million yuan per household.
The central bank said the mortgage support is aimed at reducing housing costs for first-time buyers, including migrant workers, new urban residents, recent graduates, young people and salaried urban households.
