March 13 - Chinese banks are directing a larger share of new loans toward firms engaged in technology and innovation as Beijing intensifies its focus on artificial intelligence, semiconductors and advanced manufacturing, banking officials said.
The shift in credit allocation is already under way and is expected to quicken following policy commitments announced last week that emphasize financial and policy support for strategic technology sectors over the next five years. Several bank officials described internal measures to align lending with those national priorities.
An official at a major state-owned bank, speaking on condition of anonymity because they were not authorised to speak publicly, said tech financing had been placed at the top of the agenda for new loan issuance this year. That lender is increasing credit flows into fields such as advanced manufacturing, AI and biotechnology, and is examining whether to introduce tailored, lower-rate credit products aimed at small- and micro-sized technology startups.
At a joint-stock lender in Jiangsu province, a corporate lending manager said the bank has set a target of 30% growth in new loans to high-tech and innovation companies for 2026, up from roughly 20% last year. The manager declined to be named.
For banks, the move represents a fresh avenue for lending growth at a time when the sector continues to contend with fallout from the property-sector downturn and a slowing economy. But analysts warn that the profile of many tech borrowers - early-stage firms with limited tangible collateral - could raise asset-quality concerns.
Central bank figures indicate the reallocation is already material. Outstanding loans to small- and medium-sized tech firms totaled 3.63 trillion yuan at the end of 2025, a 19.8% increase from a year earlier and outpacing overall loan growth by 13.6 percentage points. By contrast, the outstanding stock of real estate loans fell 1.6% over the same period to 51.95 trillion yuan at the end of last year, underscoring how capital has been moving away from a sector that once dominated bank balance sheets.
"This shift is essentially the result of the real estate adjustment combined with policy mandates," said Xiaoxi Zhang, a China finance analyst at Gavekal Dragonomics, adding that the property sector situation was "too severe" to support much lending. "At the same time, regulators are vigorously promoting technology finance with various assessment targets, so banks are indeed working hard to develop loan products suitable for high-tech companies," Zhang said.
China's banking regulator, the National Financial Regulatory Administration, did not respond to a request for comment.
A policy mandate
Officials and bankers describe the shift as a policy-driven reorientation designed to address multiple national priorities, including demographic pressures, strategic competition in core technologies and rapid progress by domestic AI developers. Those factors, in concert with reluctance among some global financial firms to lend to advanced Chinese technology companies amid geopolitical tensions, are pushing startups to rely more heavily on domestic funding sources that are dominated by banks.
In public statements on Monday, two major state-owned lenders, China Construction Bank and Bank of China, said they would support national strategic technology initiatives. Separately, a loan officer at a mid-sized Shanghai-based bank said the institution had created a fast-track approval channel for advanced technology companies, declining to provide additional details.
"This has become a political mandate - if you don’t perform well in this area, it affects the performance assessments of the bank president and the branches below," the loan officer said, asking not to be named.
Despite the policy emphasis, credit to technology remains a relatively small slice of overall bank lending. Central bank data show credit to high-tech and innovation companies and small- and medium-sized tech firms represented about 8% of lending last year, compared with roughly 19% for real estate.
That small share, combined with the often early-stage nature of tech borrowers, is why some market observers are cautious. Ming Tan, a director at S&P Global Ratings, said certain loans could become problematic, particularly in industries suffering from overcapacity.
Gary Ng, a senior economist at Natixis, highlighted structural differences between traditional corporate borrowers and many tech startups: "Compared with traditional sectors, many tech startups are in the early stages with negative operating cash flows, higher failure rates and collateral that is often intellectual property. These make it hard for banks to assess their prospects of business models and evaluate potential recovery rates."
With cross-border lending constrained by geopolitical concerns for some global institutions, domestic banks are becoming the primary credit source for technology firms that would otherwise tap a broader international investor base.
Implications for markets and sectors
The shift in lending priorities touches several parts of the economy and financial markets. Banks can find new revenue streams by expanding into tech finance, but greater exposure to early-stage companies could alter risk profiles and stress test bank asset quality. The property sector's reduced share of lending reflects an ongoing rebalancing of bank balance sheets away from an industry that dominated credit growth in prior years.
How banks design lending products - including whether they extend lower-rate or specially structured credit to small tech firms - will shape the financing environment for startups and may influence the pace of technology development supported by domestic credit.
Exchange rates used in reporting: $1 = 6.8696 Chinese yuan renminbi.