China's plan to subsidise some interest on loans aims to ensure households and businesses have more financial resources to reduce credit costs as Beijing looks to boost consumption, Vice Finance Minister Liao Min said on Wednesday.

The policy will help increase consumption's contribution to the country's economic development, he said.

"It will support domestic consumption to become a major drive force of the national economy," Liao said.

On Tuesday, China announced it would offer interest subsidies for businesses in eight consumer service sectors, as well as for individual consumers. Eligible businesses and consumers can receive an annual interest subsidy of one percentage point on loans.

Economists have long urged Beijing to switch to a consumption-led economic model and rely less on debt-fuelled investment and exports for growth. Pressures from higher US tariffs have heightened calls for a shift in long-term strategy.

Consumption of services in China has significant growth potential and the policy will help expand domestic demand and stabilise employment, Ministry of Commerce official Wang Bo said at the press conference with Liao.

Major state-owned banks, including Industrial and Commercial Bank, Construction Bank and Bank of China said on Wednesday they would actively implement the new subsidy policy. (Reuters)