China’s Tech and Inclusive Finance Pursue Quality Upgrade amid Rapid Credit Expansion

According to China’s financial regulatory releases, the 2023 Central Financial Work Conference designated five key financial priorities, including tech finance and inclusive finance, as core tasks for building a robust financial system. Serving the real economy as two integral pillars, tech finance underpins the cultivation of new quality productive forces and national innovation-driven development, while inclusive finance targets micro businesses and livelihood groups to consolidate the foundation of stable economic operation.

Guided by supportive national policies, credit scale in both sectors has maintained rapid double-digit growth. Large state-owned commercial banks act as major implementers of national financial strategies and lead the continuous expansion of dual-track credit supply. By the middle of 2025, the four major state-owned banks had recorded tech loan balances exceeding 4.5 trillion yuan each, with annual growth rates staying above 16 percent. Their combined inclusive loan balance surpassed 13 trillion yuan with steady growth momentum.

Inclusive finance has witnessed particularly striking expansion. Since inclusive finance was incorporated into rigid assessment indicators in 2018, the four major banks’ inclusive loan balance has surged from 1.74 trillion yuan to 13.4 trillion yuan by mid-2025. The overall inclusive loan balance across the domestic financial sector exceeded 36.5 trillion yuan in the third quarter of 2025, broadening financial coverage for micro and small market entities nationwide.

The two financial segments operate with distinct logics. Tech finance focuses on high-growth innovative enterprises such as specialised, sophisticated, unique and innovative firms and high-tech enterprises, facilitating integration between industrial innovation chains and capital flows. Inclusive finance serves financially underserved groups classified by operational scale. Clear tiered differences exist in loan pricing policies, with national-level specialised innovative enterprises enjoying the most favourable terms, followed by general inclusive borrowers, while ordinary tech enterprises lack targeted policy support.

Fast scale expansion has been accompanied by prominent structural imbalances and operational bottlenecks. Tech finance suffers from uneven resource allocation, with credit funds overly concentrated on leading high-tech enterprises. Mid-sized innovative firms in the growth phase face financing difficulties. Asset-light and research-intensive features of these businesses mismatch traditional mortgage-based risk control models, causing widespread cautious lending practices among grassroots financial institutions.

Inclusive finance also faces hidden risks amid rapid volume growth. Outdated enterprise classification standards adopted from 2011 fail to adapt to current market conditions, triggering capital saturation and asset supply shortages in some regions. Intensified assessment pressure has loosened risk supervision, inducing arbitrage behaviours and ineffective fund circulation outside the real economy. Weak post-lending management at grassroots institutions further hinders timely risk identification and disposal.

Targeted optimisation measures are being rolled out to drive coordinated high-quality development. Regulators are revising industrial classification standards to include high-potential mid-sized tech enterprises within inclusive support schemes and build an equity and credit dual financing system. Differentiated regional credit policies and cross-bank joint credit management mechanisms help improve resource allocation efficiency.

Financial institutions are refining assessment frameworks to balance scale expansion and service quality. Fintech tools including big data and artificial intelligence are deployed for intelligent risk early warning and arbitrage prevention, transforming traditional credit services into comprehensive financial advisory support. Optimised policy communication also bridges information gaps between banks and enterprises to deliver precise policy benefits.

Coordinated development of tech and inclusive finance forms a systematic framework for empowering the real economy. Continuous institutional optimisation, technological empowerment and mechanism innovation will enable accurate capital infusion into market entities, stabilising high-quality economic growth and consolidating foundational support for national financial development.