The Ministry of Finance, the National Development and Reform Commission, the People's Bank of China, and the Financial Regulatory Commission recently issued a notice on implementing financial subsidies for equipment update loans. This notice states that for loans issued by banks to business entities that meet the conditions for relending reimbursement, the central finance will provide a subsidy of 1 percentage point on the principal of the business entity's bank loan. The subsidy will be granted from the date the loan funds are transferred to the supplier's account, with a maximum subsidy period of two years.
The notice clarifies that the support scope includes business entities that implement equipment updates in accordance with the requirements of the 'Action Plan for Promoting Large-scale Equipment Updates and Consumer Goods Trade-in' issued by the State Council. These entities must be included in a list of alternative projects determined by relevant departments. Loans issued by banks to these entities that receive equipment update-related relending support from the People's Bank of China will be eligible for the central finance subsidy.
According to the notice, business entities that sign loan contracts, equipment purchase, or update service procurement contracts, and have the related loan funds issued and transferred to the supplier's account between March 7, 2024, and December 31, 2024, can enjoy the subsidy policy. The policy implementation period can be extended based on the use of the People's Bank of China's equipment update-related relending quotas.
The notice specifies that 21 national banks, including the China Development Bank, the Export-Import Bank of China, the Agricultural Development Bank of China, the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications, the Postal Savings Bank of China, CITIC Bank, China Everbright Bank, Huaxia Bank, China Minsheng Bank, China Merchants Bank, Industrial Bank, China Guangfa Bank, Ping An Bank, Shanghai Pudong Development Bank, Hengfeng Bank, Zhejiang Tailong Commercial Bank, and Bohai Bank, are designated to handle these subsidized equipment update loans.
Additionally, the subsidy funds will be managed through a 'two advance allocations' mechanism. The Ministry of Finance will advance transfer payment funds to provincial finance departments for loan subsidies. Provincial finance departments will implement the subsidy policy through the handling banks, pre-allocating subsidy funds to the provincial branches of the handling banks on a quarterly basis. Subsequent settlement of subsidy funds will be based on actual expenditure and fund audit results. The handling banks will deduct the subsidy funds upon receiving them from the finance departments when collecting interest.
The notice requires business entities to ensure that the loan funds are specifically used for equipment updates and technical modifications. Any misreporting, fraudulent claiming, misappropriation, interception, or diversion of loan funds for other purposes such as debt repayment or investment will result in disqualification from the preferential policy support, recovery of the central finance subsidy funds, and legal responsibility.
