Domestic demand is the primary driver of economic growth and a stabilizing anchor. Since the beginning of this year, in response to the risks and challenges facing economic operations, all regions and departments have, in accordance with the decisions and plans of the Party Central Committee, accelerated the implementation of more proactive and effective macroeconomic policies, and promptly introduced and effectively implemented a series of policy measures to expand domestic demand, promote industrial upgrading, and smooth economic circulation, which have played an important role in supporting the stable operation of the economy.
The recent Central Economic Work Conference pointed out that my country's economic development still faces many old problems and new challenges, the impact of changes in the external environment is deepening, the contradiction between strong supply and weak demand is prominent, and there are many risks and hidden dangers in key areas.
When outlining the economic work for 2026, the meeting prioritized "adhering to domestic demand as the main driver and building a strong domestic market." "A key characteristic of a large economy is its ample room for maneuver, internal circulation, and ability to be independent and self-reliant," said Han Wenxiu, Deputy Director of the Central Financial and Economic Affairs Commission and Director of the Central Rural Work Leading Group. He added that efforts should be made to broaden horizons, innovate thinking, and strive to cultivate more new growth points and open up new development spaces in areas such as expanding consumption and investment, developing science and technology and industries, and promoting urban-rural integration and coordinated regional development.
Investment is a crucial lever for expanding domestic demand. According to the Central Economic Work Conference, in 2026, efforts will be made to stabilize and recover investment, appropriately increase the scale of central government budgetary investment, optimize the implementation of key projects, improve the management of local government special bonds, continue to leverage new policy-based financial instruments, and effectively stimulate private investment. High-quality urban renewal will also be promoted.
Under the guidance of national policies and financial regulatory authorities, banking financial institutions will prioritize helping investment stabilize and recover as a key task for the present and future, and will continue to leverage their financial advantages to support stable investment and expanded domestic demand.
Continue to increase support for the construction of major projects.
The "two-pronged" development strategy is one of the key tasks in the "15th Five-Year Plan" proposal. "To better coordinate domestic economic work and international trade and economic struggles, the 'two-pronged' development strategy needs to address shortcomings and weaknesses from the perspective of national security, and solve the problems of unbalanced and insufficient internal development," said Yang He, Dean of the Modern Finance Research Institute and Director of the Deepening Reform Office of the Industrial and Commercial Bank of China, in an interview with the Financial Times.
In recent days, many banks have made optimizing their support for the construction of "two major projects" a primary task when conveying and studying the spirit of the Central Economic Work Conference.
"We will continue to increase support for the five major infrastructure sectors, actively cooperate in optimizing the implementation of 'two major' projects and 'two new' policies, vigorously support central government budget investment projects, ensure the financing of ultra-long-term loans for major projects supported by local government special bonds and ultra-long-term special treasury bonds, continue to leverage the role of new policy-based financial instruments, and increase our efforts to serve urban renewal," the China Development Bank emphasized at a meeting on December 12.
Policy-based finance is a key lever to attract more capital to participate in the construction of major infrastructure and key projects. “These projects cover multiple aspects, including infrastructure, equipment, R&D, and management. Investments often start at the billion-yuan or even tens of billions of yuan level, requiring substantial funds over long periods,” said Yang He. Therefore, it is necessary to leverage systematic financial innovation and structured product arrangements to attract funds from different sources and with different characteristics, such as ultra-long-term loans, policy-based finance, and private capital, to participate in investment, thereby better forming a financial synergy to support project construction and operation.
Continue to leverage the role of new policy-based financial instruments
On September 29, the National Development and Reform Commission announced the establishment of a new 500 billion yuan policy-based financial instrument, which would be used entirely to supplement project capital to support and promote the expansion of effective investment and the steady and healthy development of the economy. As of October 29, the 500 billion yuan policy-based financial instrument had been fully deployed.
"Establishing new policy-based financial instruments is an important policy to leverage the role of policy tools and further drive economic growth by stimulating domestic demand," Zeng Gang, chief expert and director of the Shanghai Financial and Development Laboratory, said in an interview with the Financial Times.
Industry insiders generally believe that the new policy-based financial instruments will drive substantial growth in subsequent investment. According to data released by the three policy banks responsible for distributing these instruments, the 500 billion yuan in new policy-based financial instruments is expected to stimulate total project investment of over 7 trillion yuan, further helping to consolidate and expand the positive momentum of economic recovery.
In 2026, banking financial institutions will continue to exert efforts to leverage the role of new policy-based financial instruments.
"Bank of China actively implemented the decisions and plans of the CPC Central Committee and the State Council regarding the establishment of new policy-based financial instruments. Under the guidance of relevant ministries and commissions, it quickly introduced a series of measures to comprehensively deepen the collaboration among government, banks, and enterprises, actively connect with various government departments and policy banks, and adhere to early action, early planning, and early results, implementing precise policies and accelerating disbursement." According to a relevant person in charge of Bank of China, just 10 days after the full implementation of the new policy-based financial instruments, the bank had completed the approval of supporting financing for projects supported by the new policy-based financial instruments, with a cumulative disbursement of over 50 billion yuan.
High-quality urban renewal
Urban renewal simultaneously carries functions such as investment, industry, employment, and urban function restructuring. It is not only an important aspect of stabilizing investment, but also a key measure to protect people's livelihoods.
According to Wen Bin, chief economist at China Minsheng Bank, by 2025, urban renewal will play an important role in stabilizing investment, linking industries, promoting consumption, and improving urban functions, thus providing strong support for expanding domestic demand.
"Following the arrangements made at the Central Economic Work Conference, urban renewal will become an important investment area," Wen Bin said.
Recently, the Agricultural Bank of China (ABC) Jiangsu Branch launched its "Strengthening Districts and Revitalizing Cities" project in Wujin District, Changzhou City. "We will use the Wujin experience as a model to replicate the collaborative model between banks, government, and enterprises throughout the province, focusing on key areas such as industrial upgrading and urban renewal. We will increase financial investment and innovate service measures to inject more ABC strength into building a strong, prosperous, beautiful, and innovative Jiangsu," said a relevant official from ABC Jiangsu Branch.
Urban infrastructure serves as the carrier of Shanghai's core functions as a "five centers." As a deep participant in the construction of Shanghai's "five centers," Bank of Communications closely follows national policy guidance, actively serves urban renewal, helps the city transform, and paints a magnificent picture of development.
"In 2026, Bank of Communications will continue to optimize its financial service capabilities to provide stable and flexible financial support for urban renewal," a Bank of Communications official told the Financial Times. The official added that the bank will actively explore and develop more replicable and scalable "Shanghai experiences" to provide strong support for the construction of Shanghai's core international financial center.
