RMB 800‑Billion New‑Type Policy‑Based Financial Instruments Unleashed

The first tranche of 2026 new‑type policy‑based financial instruments has recently been disbursed in Zhejiang, Yunnan, Xinjiang, Sichuan and other regions.

Multiple experts note that the current round of instrument disbursement features expanded scale, broader investment coverage, optimized regional allocation and stronger support for private enterprises. Against the backdrop of insufficient effective demand and mounting pressure on investment growth, the RMB 800‑billion new‑type policy‑based financial instruments are expected to leverage total project investment worth around RMB 10 trillion, serving as a key underpinning force for stabilizing investment and growth in the second half of the year.

First Tranche of Instruments Rolled Out

Three policy banks have recently disbursed 2026 new‑type policy‑based financial instruments.

On September 1, Agricultural Development Bank of China Zhejiang Branch granted RMB 300 million under the country’s first new‑type policy‑based financial instrument in 2026, earmarked for the construction of the Jiande Pumped‑Storage Power Station project in Zhejiang. On the same day, Export‑Import Bank of China Yunnan Branch disbursed RMB 78 million of such instruments to replenish capital for Phase‑II of the Kunming International New‑Material Packaging Sci‑Tech and Cultural Industrial Park project.

On September 2, Export‑Import Bank of China Xinjiang Branch provided RMB 58.18 million via the instruments to support the construction of the Jiangjunmiao Station Special Railway Line project of Xinjiang Xinlianxin Chemical Industry Co., Ltd., with private capital participation. Also on September 2, China Development Bank Sichuan Branch disbursed RMB 245 million to back the Zigong Base project of CALB for power batteries and energy‑storage batteries.

“Judging from the first‑batch implemented projects, the 2026 new‑type policy‑based financial instruments show four major features: expanded scale, broader investment scope, better‑balanced regional distribution and greater support for private enterprises,” said Luo Zhiheng, Chief Economist at Yuekai Securities, in an interview with Shanghai Securities News.

Besides the notable scale expansion compared with the RMB 500‑billion quota last year, the instruments cover a wider range of sectors. “This year, while continuing support for traditional infrastructure and livelihood‑related weak links, funds are further tilted toward new quality productive forces and the modern industrial system. The first‑batch projects in Zhejiang, Sichuan and Yunnan fall in strategic emerging industries including green low‑carbon sectors, new energy and new materials,” Luo Zhiheng projected. Going forward, as projects for emerging industries such as the digital economy, artificial intelligence, low‑altitude economy and commercial spaceflight get launched, fund allocation is expected to shift from supporting infrastructure development to fostering new drivers of industrial growth.

Expected to Leverage Investment on the Scale of RMB 10 Trillion

Mobilizing more capital and projects through leverage effect is the market’s biggest expectation for the new‑type policy‑based financial instruments.

“The value of new‑type policy‑based financial instruments lies in unclogging financing chains rather than directly replacing fiscal funds,” remarked Lou Feipeng, Researcher at Postal Savings Bank of China.

Data from the National Development and Reform Commission show that the RMB 500‑billion new‑type policy‑based financial instruments in 2025 leveraged total project investment exceeding RMB 7 trillion, with a leverage ratio of around 14 times. Luo Zhiheng estimated that by this metric, the current RMB 800‑billion instruments could drive total project investment of roughly RMB 10 trillion. Liao Bo, Chief Macro‑Economy Analyst at Northeast Securities, offered a more optimistic forecast, expecting a leverage effect of about RMB 11 trillion in total project investment, corresponding to an incremental increase of around RMB 10 trillion in social capital and supporting funds.

Luo Zhiheng cautioned that these figures represent full‑cycle total project investment and will not all materialize within 2026. “The growth‑stabilizing effect of new‑type policy‑based financial instruments spans multiple years. The first batch of physical workload will take shape in the second half of this year, while larger‑scale investment conversion will gradually unfold from 2027 onward.”

Moreover, policy implementation effectiveness cannot be measured merely by disbursed amount and project quantity. Luo Zhiheng proposed three assessment dimensions: first, the conversion rate of physical workload, focusing on the time span from fund allocation to project commencement and the volume of actual investment generated in the second half of the year; second, delivery of supporting financing, tracking the timely roll‑out of supporting bank loans and credit granting conversion ratio — a key gauge of leverage effect; third, private investment participation, looking at the share of projects involving private enterprises, the volume of instrument funds they obtain, and whether such projects genuinely drive the recovery of private fixed‑asset investment.

Synergized with the “Six‑Network” Initiative

New‑type policy‑based financial instruments are set to work in tandem with multiple policies and play a critical underpinning role in stabilizing investment and growth in the second half of the year.

According to Lou Feipeng, the concentrated disbursement of the RMB 800‑billion instruments in the second half‑year, combined with special‑purpose bonds, ultra‑long‑term special treasury bonds and investment within the central budget, forms a policy package. By replenishing project capital to mobilize bank loans and social capital, it delivers strong investment multiplier effects and carries great significance for stabilizing investment and economic growth.

Notably, the instruments constitute a vital component of the diversified investment and financing system for the “Six‑Network” construction. Ming Ming, Chief Economist at CITIC Securities, analyzed that the instruments can fill capital shortfalls in water networks, new‑type power grids, computing power networks and other fields, leverage bank credit and industrial capital, move the “Six‑Network” projects from planning to construction, and reconcile stable investment with structural improvement.

Zhang Kun, Deputy Director of Research at China Chengxin International Research Institute, stated that “Six‑Network” projects entail massive construction volume. Accelerated roll‑out of the instruments will quickly generate tangible physical workload and help spur demand for building materials, equipment and labor.

Source: Shanghai Securities News