China is recalibrating its fiscal and financial priorities, with recent measures signaling a strategic shift: fiscal policy is moving toward household demand support, while credit allocation is tilting to technology, sustainability and inclusive growth.

A newly introduced childcare subsidy of 3,600 yuan ($501) per year for every child under three underscores Beijing's pivot from enterprise subsidies to direct household support.

“The subsidy is an important step forward, and we could expect further initiatives in pensions, healthcare and housing,” said Luo Zhiheng, chief economist at Yuekai Securities.

Pensions remain a weak spot. Despite a small increase this year, average monthly benefits for nonworking rural and urban residents stand just above 200 yuan, well below subsistence levels of roughly 600 yuan in rural areas and 800 yuan in cities. Luo argued that raising these benefits would directly boost consumption capacity and confidence.

This comes as the property sector slowdown continues to weigh on growth: sales area, prices and investment fell 30–50 percent in the first half of 2025 compared to 2021. While Luo believes the “hard landing” risk has eased, the sector faces a prolonged adjustment cycle.

China's central bank reported that by June, loans to technology, green development, inclusive finance, eldercare and the digital economy grew between 11.5% and 43% year-on-year, together accounting for 70% of new lending.

• Technology lending reached 44.1 trillion yuan ($6.16 trillion), up 12.5% from a year earlier.

• Green loans surged to 36.6 trillion yuan by end-2024, more than tripling since 2019.

• Inclusive finance also expanded: SME loans climbed 12.3% to 36 trillion yuan, while agriculture-related loans hit 13.9 trillion yuan.

“This demonstrates a significant tilt of financial resources toward key areas of the real economy,” said Zeng Gang, director of the Shanghai Institution for Finance & Development.

Meanwhile, asset quality showed modest improvement: nonperforming loans at commercial banks fell to 3.4 trillion yuan with the NPL ratio edging down to 1.49%. Analysts caution, however, that property exposure and SME risks remain unresolved.

For international investors and financial institutions, these policy shifts suggest:

• Household demand will play a greater role in driving China's growth model.

• Opportunities are expanding in technology, sustainability, and inclusive finance.

• Despite improved indicators, credit risks tied to property and SMEs warrant close monitoring.

Taken together, China's fiscal and credit pivots reflect a gradual transition away from property-led growth toward a more sustainable, demand-driven economy — one that will reshape both domestic consumption patterns and cross-border capital opportunities.