March 13 (Reuters) – Chinese lenders plan to steer more money toward technology and innovation-oriented firms, bankers say, responding to Beijing’s pledge to aggressively adopt artificial intelligence throughout the economy and dominate emerging sectors.

The credit-allocation shift toward tech is well underway and is set to accelerate further under the government’s plans, ‌unveiled last week, to go all-in on technologies from AI, semiconductors to advanced manufacturing, they said.

At the annual meeting of the National People’s Congress, the country’s top ‌leaders promised generous funding and policy support for tech and innovation over the next five years.

An official at a major state-owned bank told Reuters that tech financing had been made a priority for new loan issuance this ​year and the lender was stepping up funding to sectors including advanced manufacturing, AI and biotechnology.

The bank is studying whether to roll out new credit options with lower interest rates, especially designed for small- and micro-sized tech startups, said the official, who declined to be named as they were not authorised to speak to the media.

A corporate lending manager at a joint-stock bank in the eastern province of Jiangsu said the lender had targeted 30% growth in new loans to high-tech and innovation companies in 2026, up from around 20% last year.

While this offers banks a ‌fresh source of lending growth as they reel from a ⁠debt crisis in the property sector and a slowing economy, analysts warn the nascent nature of the targeted companies and the lack of proper collateral in some cases could pose asset-quality risks.

Outstanding loans to small- and medium-sized tech firms reached 3.63 trillion yuan ($528 billion) at the end of ⁠2025, up 19.8% from a year earlier and outpacing overall loan growth by 13.6 percentage points, according to data from the central bank.

By comparison, the outstanding value of real estate loans fell 1.6% over the same period to 51.95 trillion yuan at the end of last year, underscoring a dramatic reallocation of capital away from the 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, China finance analyst at Gavekal ​Dragonomics, adding that the property sector situation was “too severe” to do ‌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 Reuters request for comment.

A POLICY MANDATE

China’s focus on tech reflects its need to grapple with an ageing workforce and looming demographic crisis, a fierce battle with the U.S. for supremacy in core technologies, as well as dramatic progress made by Chinese developers of AI models.

Given the caution among global financial firms to lend to advanced Chinese tech firms due to Sino-U.S. tensions, analysts say the homegrown startups would have to rely on domestic funding options, which are dominated by ‌bank creditors.

In separate statements on Monday, major state-owned banks China Construction Bank and Bank of China said ​they would fulfill their responsibilities by serving national strategic technology initiatives.

A loan officer at a mid-sized bank based ​in Shanghai told Reuters that the lender had set up a dedicated fast-track approval ​mechanism for advanced technology companies. The official declined to provide further 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,” said the loan officer, who ​also declined to be named.

Tech loans account for a small portion of bank lending – credit to high-tech and innovation companies and small- and medium-sized tech firms reached about 8% last year, compared with around 19% for real estate, central bank data showed.

Despite the small percentage of tech lending, some loans could become problematic, especially in ​industries with overcapacity, said Ming Tan, a director at S&P Global ‌Ratings.

“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,” said Gary Ng, a senior economist at Natixis.

“These make it hard for banks to assess their prospects of business models and evaluate potential recovery ​rates.”

($1 = 6.8696 Chinese yuan renminbi)

(Reporting by Beijing Newsroom; Editing by Sumeet Chatterjee and Thomas Derpinghaus)