China's Ministry of Finance, jointly with the Ministry of Industry and Information Technology, the People’s Bank of China and the National Financial Regulatory Administration, issued a notice implementing a Special Guarantee Plan for Private Investment. The plan sets a RMB 500 billion quota over two years and uses the National Financing Guarantee Fund system, alongside risk compensation, fee-reduction subsidies and capital replenishment, to strengthen government-backed credit enhancement for eligible private investment loans to small, medium and micro enterprises. Support covers mainly medium- and long-term loans for activities including equipment and raw-material purchases, technological and digital transformation, factory renovation and expansion, working capital, and investment linked to consumer-service scenarios such as catering, accommodation, health, elderly care, childcare, domestic services, culture and entertainment, tourism, sports, green and digital sectors, and retail. Participating banks must bear at least 20% of loan risk, while the government-backed financing guarantee system may bear up to 80%; within this, the Guarantee Fund’s risk-sharing ratio is capped at 30% for loans over one year up to three years, 35% for over three years up to five years, and 40% for over five years. Re-guarantee fees will be charged at half to drive fee reductions through the system, and direct guarantee institutions’ fee rates are capped at 1%; the single-borrower guarantee limit is RMB 20 million. The Guarantee Fund also raises the compensation rate ceiling for this business from 4% to 5%, allows fixed assets formed by the loan-funded investment to be added as counter-guarantee collateral, and will receive central risk compensation for newly added compensation expenditures; the Ministry of Finance will determine the Guarantee Fund’s annual business scale in a coordinated way. To support delivery, the central government will inject RMB 5 billion into the Guarantee Fund and link equity investment and business cooperation across national, provincial and municipal guarantee tiers, with capital to be directed to provincial institutions and used to reward performance in expanding business, lowering fees and controlling risk, with attention to the central and western regions. The Guarantee Fund is tasked with refining operating arrangements for cooperating institutions, upgrading the national government-backed financing guarantee digital platform, and strengthening monitoring and tracking of plan implementation, while financial and local finance departments are assigned supervisory and support roles.

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