China’s banks recorded a marked increase in new lending during January, signalling an uptick from the previous month, yet the growth fell short of analysts’ expectations and remained well below last year’s record levels. The tepid expansion reflects continued weak credit demand within the country’s economy.
Data released on Friday by the People’s Bank of China (PBOC) showed that new yuan loans in January amounted to ¥4.71 trillion (approximately $681.56 billion), a significant rise from December’s ¥910 billion. Despite this surge, the figure fell short of the ¥5 trillion anticipated by economists and remained below the ¥5.13 trillion registered in January 2025.
Credit typically rises at the start of the year, as banks advance loans to high-quality borrowers and key market participants. However, in January 2026, short-term corporate borrowing was relatively muted, partly because the Lunar New Year fell in mid-February this year, delaying some financing activity.
Guotai Junan International’s chief economist, Zhou Hao, commented, “The January credit data sends mixed signals. Aggregate financing exceeded expectations, but growth in new loans was slightly weaker than projected.” Zhou further noted that the proportion of new lending contributing to Total Social Financing (TSF) has been declining, remaining below 50% for most of the second half of 2025. This trend indicates that government-directed financing continues to play a dominant role in overall credit growth. He expects this pattern to persist throughout 2026, supported by accommodative monetary policies and a fiscal deficit projected to exceed 4% of GDP.
Government surveys of the corporate sector indicated a slowdown in production activity during January, reflecting weak domestic demand in some industries. While last year’s export surge helped China’s economy achieve an official growth rate of around 5%, structural imbalances, trade tensions, and geopolitical uncertainties pose risks for 2026. Reuters forecasts suggest growth may be limited to roughly 4.5% this year.
The following table summarises key credit indicators for January:
| Indicator | January 2026 | December 2025 | Year-on-Year Growth |
|---|---|---|---|
| New bank loans | ¥4.71 trillion | ¥910 billion | – |
| Household mortgage loans | ¥456.5 billion | -¥91.6 billion | – |
| Corporate loans | ¥4.45 trillion | ¥1.07 trillion | – |
| Total Social Financing (TSF) | +8.2% | +8.3% | – |
| Broad M2 money supply | +9.0% | +8.5% | – |
| Narrow M1 money supply | +4.9% | +3.8% | – |
| Total yuan loans | +6.1% | +6.4% | – |
Policymakers remain ready to implement more stimulative measures. The central bank has already reduced certain sector-specific interest rates and retains the option to lower reserve requirements and benchmark rates further. Efforts to boost household spending, address persistent deflation, and stabilise the long-term property sector are expected to be central to maintaining economic balance.
Economist Julian Evans-Pritchard observed, “Last year, fiscal support helped banks maintain a neutral stance, but this year, with reduced external support, the PBOC will need to act more decisively to prevent slower economic growth.”
Overall, the January lending data reflects the subdued demand in China’s economy, which is unlikely to be reversed rapidly without continued government intervention and targeted stimulus.