China Moves to Reset Household Credit Records to Spur Lending

China has announced a one-off adjustment to its national credit system aimed at reviving weak household borrowing, underscoring Beijing’s growing reliance on targeted policy tools rather than broad monetary easing.

Under the new initiative, individuals with small overdue debts — generally below 10,000 yuan — will be eligible to have those records removed from their credit histories once the balances are fully repaid by March 2026. The policy is designed to ease access to credit for consumers who have been effectively shut out of the lending system due to minor delinquencies accumulated during recent economic strains.

The move comes as China grapples with subdued consumer confidence, softer retail sales, and slower loan growth, even as the central bank has held benchmark lending rates steady for several months. By focusing on credit repair rather than rate cuts, policymakers are signaling a preference for precision measures that stimulate demand without reigniting financial excesses.

For global markets, the decision highlights the evolving posture of the world’s second-largest economy: cautious on broad stimulus, but increasingly willing to intervene at the structural level to stabilize consumption and financial conditions. China’s household credit trajectory has implications well beyond its borders, influencing commodity demand, global growth expectations, and broader risk sentiment.

As other major economies debate the timing and scale of policy normalization, Beijing’s approach illustrates a parallel path — one that prioritizes targeted financial relief as a lever for economic resilience.