Nomura Asia Insights: China — Ministry of Finance Announces Modest Support Measures
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Nomura characterizes the latest fiscal support measures announced by China's Ministry of Finance as targeted, modest, and largely in line with expectations. The initiatives extend and optimize three existing loan interest subsidy programs covering consumer loans, service-sector enterprise loans, and equipment upgrades through December 2026. Additionally, two new programs were introduced: an interest subsidy for small and medium enterprise fixed-asset loans across 14 key supply chains, and a RMB 500 billion special guarantee initiative targeting private investment. However, contrary to market expectations and prior media speculation, the Ministry did not announce any new mortgage interest subsidies. Nomura argues these measures are insufficient to stabilize growth or address the root causes of economic softness. While the government can lower financing costs and mitigate risks, it cannot independently create profitable investment opportunities or restore private sector confidence in regulatory predictability. The firm maintains its 2026 fiscal projections, featuring an official deficit ratio of 4.0%, central special government bond quotas of RMB 1.6 trillion, and local special-purpose bond quotas of RMB 4.8 trillion. Trade-in subsidies will be reduced from RMB 300 billion to RMB 250 billion. Nomura believes Beijing will need to deploy more substantial policy actions by the second quarter to achieve GDP growth exceeding 4.5%.