An 800 billion yuan new policy-based financial tool is rapidly moving from policy blueprint to practical implementation. Recently, the first batch of funds from this 2026 new policy-based financial tool was deployed across multiple regions. According to incomplete statistics, the three policy banks — China Development Bank, The Export-Import Bank of China, and Agricultural Development Bank of China — have already distributed these funds in provinces including Zhejiang, Sichuan, and Shanxi. Compared to 2025, this round of financial tool deployment marks a comprehensive upgrade, characterized by an expanded scale, an earlier launch timeline, broader investment targets, and a greater tilt toward private enterprises. Market estimates suggest it could unlock a project investment scale reaching ten trillion yuan, underscoring its role in stabilizing investment and bolstering growth.
Market analysts believe that to maximize the leveraging effect of capital funds, this round of policy emphasizes stronger coordination between monetary and fiscal measures. Monetary policy is expected to utilize tools like pledged supplementary lending (PSL) to provide low-cost, long-term funding support for the implementation of policy-based financial tools and major project construction. The impact of this round of funds on aggregate social financing will be felt gradually over several phases, and there may be room for a reduction in the PSL rate at a later stage.
Where things stand with the rollout
This year's government work report proposed issuing 800 billion yuan in new policy-based financial tools to attract greater social capital participation. Recently, first-batch deployments have been completed in several regions, including Zhejiang, Hubei, Sichuan, Yunnan, Fujian, Shanxi, Henan, and Hainan, signaling this major policy tool has entered a substantive implementation phase. The new policy-based financial tool features long durations, low costs, and strong orientation, primarily used to supplement capital funds for key projects and guide social capital to co-invest in major project construction.
On September 1st, the Zhejiang branch of the Agricultural Development Bank of China successfully deployed the nation's first 2026 new policy-based financial tool fund of 300 million yuan, specifically supporting the construction of the Jiande Pumped Storage Power Station project, injecting policy-based financial support into a major green and low-carbon project. Following closely on September 2nd, the China Development Bank implemented the first deployments of the 2026 tool for three projects involving private investment and private capital participation, totaling 460 million yuan. These funds were entirely used to supplement project capital, strengthening support for private investment projects located in Sichuan, Zhejiang, and Hubei respectively.
Since then, first deployments at the local level have continued to emerge. For instance, on September 6th, Shanxi Province's first 2026 new policy-based financial tool fund was successfully deployed to support the first phase of the Changzhi City Binhu District Wastewater Treatment and Reuse Project, which involves private capital participation. The Shanxi branch of the Export-Import Bank of China invested 32.5 million yuan from the fund to supplement the project's capital, driving a total project investment of 350 million yuan. On September 7th, Henan and Hainan provinces simultaneously launched their first deployments: the Henan branch of the Export-Import Bank of China invested 60 million yuan in Henan Yinjinda New Materials to supplement the capital for an intelligent production line project, expected to drive 600 million yuan in effective investment; while the Hainan branch of the Export-Import Bank of China extended funds to a local tech private enterprise to support its investment in the first phase of an international information hub project within the Hainan Free Trade Port.
In terms of investment sectors, the new tool is leaning more towards new productive forces. According to incomplete statistics, this round of funds is being directed not only towards infrastructure and green projects, such as pumped storage and sewage treatment, but also covers advanced manufacturing and industrial projects in the digital economy, with substantial support going to private investment projects' capital funds. Zhang Lin, Deputy Dean and Chief Macro Researcher at the Far East Credit Research Institute, believes that compared to the past infrastructure-dominated landscape, this round of funds shows a greater tilt towards new energy, the digital economy, AI, and the low-altitude economy, while also retaining traditional major projects like water conservancy, transportation, and power grids. This creates a new characteristic that balances "stabilizing growth with optimizing structure."
Potential to drive ten-trillion-yuan total investment
Compared to 2025, the 2026 new policy-based financial tool features an expanded quota and an earlier deployment schedule. Based on comprehensive market analysis, the official launch of the 800 billion yuan fund is expected to leverage a total investment scale of around ten trillion yuan, becoming a crucial lever for stabilizing investment and supporting economic growth. In 2025, the 500 billion yuan tool began deployment at the end of September and was fully deployed by the end of October, supporting over 2,300 projects and driving a total project investment of approximately 7 trillion yuan, a leveraging multiple of 14 times. This year, not only has the tool's scale increased, but the deployment pace has also advanced significantly. The market expects that, referencing past deployment efficiency, the 800 billion yuan will likely be deployed quickly within one to two months.
Zhang Xu, Chief Fixed Income Analyst at Everbright Securities, analyzes that compared to last year, this year's tool exhibits three characteristics: larger scale, stronger policy coordination, and better investment targeting. Based on past deployment speed and current circumstances, it's quite possible that the 800 billion yuan will be fully deployed within the next one to two months. Judging from the number of projects in previous rounds, this year's 800 billion yuan is likely to be directed primarily at projects ranging from tens of millions to hundreds of millions of yuan; however, considering the size of individual projects, it's also possible we will see some reaching the scale of 100 billion yuan. The core advantage of the new policy-based financial tool lies in its ability to leverage large-scale social investment with a relatively small amount of capital funds.
Several institutions have provided estimates for the total investment driven this year based on different assumptions. Zhang Xu estimates, using a leveraging multiple of 13 times, that this year's 800 billion yuan could support a total project investment of about 10 trillion yuan. Assuming a project construction period of around three years, this translates to an average annual investment demand of over 3 trillion yuan in the next three years. "The theoretical corresponding total investment multiple could ultimately reach around 10 times," notes Zhang Lin. However, he emphasizes that the more critical factor is the conversion effect within the year. The tool's core function is to supplement project capital funds, remove bottlenecks for supporting financing, and bring reserve projects to fruition earlier. But its short-term capacity is constrained by the maturity of quality projects, the closure of capital fund loops, and the pace of supporting financing.
Potential for structural PSL rate cuts
For the new policy-based financial tool to fully unleash its leveraging effect, coordinated efforts from monetary and fiscal policies are essential. Market analysis indicates that the tool's impact on aggregate social financing (ASF) is mainly in the form of structural optimization, with limited impact on the total amount. PSL, policy financial bonds, and entrusted loans are key indicators for observing the pace of implementation. Reviewing the first half's financial data, PSL net injections were zero in February and March, and remained negative from April through August. From January to May, entrusted loans continued to decline, turning slightly positive only in June, indicating overall weak deployment momentum. In contrast, during the concentrated deployment period in 2025, entrusted loans saw a single-month increase of 165.4 billion yuan in October, with significant year-on-year growth, largely attributable to the concentrated deployment of the tool's funds. This provides an important reference for the tool's implementation effect this year.
The Guotai Haitong fixed income team believes that the implementation of policy-based financial tools has a more direct impact on items like entrusted loans, but the effect on the total ASF is typically phased. Structural improvements are often more pronounced than a step-change increase in ASF growth. Zhang Lin analyzes that from a within-year perspective, the leveraging effect on ASF is estimated at 2 to 3 times, corresponding to roughly 1.6 trillion to 2.4 trillion yuan in credit issuance. Considering that new RMB loans in July 2026 were notably low, with ASF increasing by only 1.41 trillion yuan, the base for credit issuance is relatively weak. The accelerated implementation of the tool could have a more significant marginal effect on "stabilizing investment and halting the decline" in the fourth quarter. Corporate medium and long-term loans are more likely to show a "gradual release" rather than a one-time surge.
The central bank's Q2 monetary policy implementation report clarifies that PSL quotas will be arranged this year to support policy and development financial institutions in advancing the new policy-based financial tool for supplementing major project capital funds. Zhang Lin believes that PSL is explicitly designated as a direct tool to support these institutions, a more direct and closer arrangement compared to 2025. PSL possesses the "dual function" of base money injection and structural orientation, capable of providing low-cost, long-term funding sources for capital injections and precisely channeling funds into key policy areas. At the same time, the central bank continues to maintain ample and stable market liquidity, creating a favorable financial environment for concentrated fund deployment and smooth project implementation.
The market widely anticipates room for a reduction in the PSL rate. Zhang Liang, Chief Fixed Income Analyst at SDIC Securities, believes that from a monetary perspective, if the policy-based financial tool raises funds through PSL, and considering the PSL rate is higher than the policy financial bond rate, there is a possibility of a cut. Zhang Lin suggests that if the PSL rate is further reduced, it would effectively lower the overall cost of project funds and enhance the leveraging efficiency of the capital fund tool. During the accelerated deployment of the tool, a return to positive net PSL injections would serve as an important leading signal.