Chinese banks have lowered rates and boosted the amounts they will lend to consumers, even though there has been a surge in defaults, as Beijing turns to credit to help boost domestic consumption hit by the coronavirus.

More than a dozen state-owned lenders have started offering promotions, such as halving borrowing costs and doubling the amount consumers are allowed to borrow, since the banking regulator relaxed credit controls last month.

An official at the risk management department of a major bank said lenders were participating even if they knew that some loans were unlikely to be repaid. “We have to take part in the operation because the government wants to support the real economy with cheap credit,” said the official, adding: “These loans may go under if the economy continues to weaken.”